PBoC imposes ban on crypto trading as it fosters ‘illegal financial activity’
- PBoC bans crypto trading activities and a plethora of associated services, labeling it “illegal.”
- Overseas cryptocurrency exchanges providing services to Chinese residents will be investigated in accordance with the law.
- PBoC reveals active monitoring (online and offline), fullchain tracking and fulltime information backup of mining and exchange transactions.
China’s central bank cracks down on illegal financial activities from overseas cryptocurrency exchanges. The recent announcement marks the People’s Bank of China's (PBoC) strongest move against cryptocurrency mining and trading to date.
Ban on cryptocurrency trading and related services in Mainland China
In a recent crackdown on exchanges and institutions involved in crypto mining and providing crypto-related services, PBoC has announced a complete ban on cryptocurrency trading.
PBoC has banned overseas exchanges from catering to Mainland China residents online. Financial institutions, payment firms and related companies are barred from facilitating online crypto trading.
The PBoC considers all cryptocurrency-related transactions illegal based on information on their website.
When Beijing shut down all Bitcoin mining activities, triggering “The Great Migration,” the country took its first steps in its clampdown on cryptocurrency-related activities and entities.
Bobby Lee, founder and CEO of BalletCrypto, a physical crypto wallet, considers that PBoC’s latest move is not the “last nail in the coffin.”
Don’t panic: #China has just banned #Bitcoin again!
— Bobby Lee - Ballet: World's EASIEST wallet! (@bobbyclee) September 24, 2021
This time, the ban targets trading on offshore exchanges (using VPN), as well as using local agents or OTC services to exchange from CNY to & from USDT.
As bad as this may sound, it’s actually NOT the last nail in the coffin!
PBoC has cited concerns around the disruption in economic and financial order, criminal activities like gambling, illegal fundraising, money laundering and pyramid schemes as the primary cause for the crypto trading ban.
The central bank's concern is that cryptocurrency-related activities endanger national security and social stability.
PBoC’s plan of action includes collaborating with several government-run agencies to issue, supervise and guide a unified deployment of the crypto ban. The central bank has identified local financial authorities as the lead in implementing the ban in their provinces.
The crypto market has suffered a drop in prices, in response to PBoC’s announcement. Historically, news of a clampdown from China’s central bank triggers negative sentiment and fear among market participants.
Charles Edwards, founder of Capriole Investments, holds the opinion that news of China’s Bitcoin ban is not new. The recent drop in price is irrational. Edwards recently tweeted:
BREAKING: China bans Bitcoin for the 1000th time.
— Charles Edwards (@caprioleio) September 24, 2021
The news of crypto trading being illegal in China is not new and honestly should have been priced in.
Bitcoin dropping 6%+ on this is irrational and a gift. https://t.co/435tMnSKfR
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
