China Declares Cryptocurrency Transactions Illegal And Forbids Banks And Fintech Firms From Engaging In Them
China declares cryptocurrency transactions illegal and forbids banks and fintech firms from engaging in them
In a recent announcement, the Central Bank of China declared all cryptocurrency transactions in the country to be illegal. This was revealed in a court order that was issued last Friday. As a result, China's central bank has barred all banks, payment companies, and fintech companies operating in the country from transacting in cryptocurrency.
This latest crackdown is the latest in a series of offensives against cryptocurrencies by the country, which is known for its extreme conservatism. The country has also prohibited international cryptocurrency exchanges from providing their services to investors in the country, effectively prohibiting their operations in the country altogether.
In order to ensure compliance, the central bank has stated that it will increase its monitoring of risks arising from cryptocurrency-related activities. As a result of the order, the value of Bitcoin has fallen by as much as 4.5 percent, and the value of Ethereum has fallen by as much as 6.5 percent.
China’s onslaught against cryptos continues
This latest directive represents the latest assault in China's ongoing campaign to suppress cryptocurrency mining and trading. China's State Council issued an order in May to crack down on cryptocurrency mining in the country. According to the council, mining activities consume enormous amounts of energy, which makes it difficult to reduce carbon emissions through these activities.
Bitcoin miners in China's southwest province of Sichuan were reported to have fled the country in large numbers in June as a result of the country's ban on cryptocurrency mining. According to the owner of a crypto mining farm in the area, many miners are exiting the industry in order to comply with government regulations and policies.
Considering that China is the region that accounts for more than half of global bitcoin production, the country's ban on operations has effectively brought the industry to a halt, with miners abandoning their equipment or seeking refuge in places such as Texas or Kazakhstan.
According to the Global Times, local Chinese authorities claim that the most recent crackdown has resulted in a 90 percent reduction in the country's bitcoin production.
Most cryptocurrency trade takes place in China, which accounts for the vast majority of global trade in cryptocurrencies. According to a study published in 2020, the country is responsible for nearly 80 percent of all bitcoin operations worldwide.
China is an excellent location for Bitcoin mining because of the availability of cheap electricity and the fact that Bitcoin mining is an energy-intensive endeavor. The majority of China's electricity, on the other hand, is generated by coal-fired power plants. This is one of the dirtiest sources of energy in a world that is struggling to transition to more environmentally friendly sources of energy.
This has resulted in widespread dissatisfaction among Chinese officials, who are determined to achieve the country's new climate-change objectives. When Elon Musk, the billionaire owner of the Tesla electric vehicle company, announced that his company will not accept cryptocurrency payments until the mining process is cleaned up, he was joining the fight against dirty energy.
Essentially, with this latest development, China has effectively put a nail in the coffin of cryptocurrency activity in the country.
