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China declares all crypto-related transactions illegal and forbids overseas exchanges from serving its citizens

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China is increasingly cracking down on bitcoin. Florence Lo/Illustration/Reuters

The People's Bank of China said Friday that all cryptocurrency-related transactions are illegal.
The central bank said cryptocurrencies "are not legal, and should not and cannot be used as currency in the market."
It also banned foreign exchanges from providing crypto services to local residents in China's biggest crackdown move yet.
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China's central bank declared all cryptocurrency-related transactions illegal on Friday, and said foreign exchanges are banned from providing services to Chinese residents, in its strongest crackdown move yet on the digital asset industry.

Coins such as bitcoin and ether "are not legal and should not and cannot be used as currency in the market," the People's Bank of China said in a statement.

Virtual currencies do not have the same legal standing as fiat currency as they are issued by non-monetary authorities and use encryption technology, it said.

Bitcoin dropped 5.7% to about $41,110 in the wake of the announcement, according to data from CoinDesk. Ether lost 9% to hit $2,788, ada declined 3% to $2.16 and Ripple's XRP moved 7% lower to 92 cents. Dogecoin fell 8% to 20 cents. 

The PBOC also said all crypto-related transactions are not allowed under the law.

Activities considered illegal cover a range of operations, such as buying and selling virtual assets as a central counterparty, and providing intermediary or pricing services for crypto transactions. It also includes token issuance financing, crypto derivatives transactions, and other activities suspected of illegal sale of tokens.

"Those who carry out related illegal financial activities (that) constitute a crime shall be investigated for criminal responsibility in accordance with the law," it said.

The central bank specifically called out the services offered by offshore crypto exchanges to Chinese customers via online platforms.  

 

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