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China Declares Cryptocurrency Transactions Illegal, Bitcoin Price Drops Dramatically

For months, China has been gradually tightening the screws on cryptocurrencies and all related activities, to maintain control over its economy. On Friday morning, the country declared all transactions of cryptoactive and all related activities within its borders. A massive crackdown that drastically brought down Bitcoin and other popular cryptocurrencies.

At the beginning of the second quarter of 2021, Bitcoin peaked (over € 52,000 in April) and continued to attract many recreational investors. After this wave of overvalued excitement, the cryptocurrency has fluctuated a lot only to stabilize again only recently. But it suddenly went from a peak of 38,000 euros on Friday morning to just over 36,000 euros today, following this latest announcement.

The People’s Bank of China made the statement in a question and answer section posted on its website. “Foreign currency exchanges abroad that use the Internet to provide services to national residents are also considered an illegal financial activity,” the statement read.

End of the game for cryptocurrencies in China

People who work for cryptocurrency exchanges abroad will also be investigated. The Bank also announced that it is improving its monitoring systems for cryptocurrency-related activities.

The news comes after China began cracking down on cryptocurrency mining in May, days after banning all financial institutions and payment companies from doing crypto-related business. Regarding mining, the government justified this decision by adding the energy argument, in order to achieve its aggressive carbon targets. In fact, the country plans to become carbon neutral by 2060.

According to a statement issued at the time, the Chinese government “will crack down on bitcoin mining and trading activities and resolutely prevent the transfer of individual risks to society.” Like today, previous crackdowns also led to the crash of bitcoin, caused by massive sales. Its value almost halved between April and July this year, Bloomberg reports.

However, the announcement on Friday did not surprise cryptocurrency companies. “Chinese regulators have always been extreme in their opinions and these comments are not new,” Vijay Ayyar, head of the Asia-Pacific region of cryptocurrency exchange Luno in Singapore, told Bloomberg. It is intriguing that the continuation of the announcements may indicate that China is struggling to completely eradicate cryptocurrency activity.

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