The People’s Bank of China, the country’s central bank, said Friday that cryptocurrency transactions are illegal, saying such currencies “do not have legal tender status” and therefore “cannot be circulated as currency in the market.”
In a statement, the bank said that bitcoin and other virtual currency transactions have disrupted economic and financial order, contributing to a rise in “money laundering, illegal fund-raising, fraud, pyramid schemes, and other illegal and criminal activities.”
Crypto transactions are now considered criminal financial activity in China, the bank said, and the country will “resolutely curb the hype of virtual currency transactions, severely crack down on illegal financial activities and illegal criminal activities related to virtual currencies, protect the safety of the people’s property in accordance with the law, and make every effort to maintain economic and financial order and social stability.”
Friday’s announcement is the culmination of an ongoing crackdown on crypto in the country; the Chinese government began issuing warnings about trading in mining cryptocurrencies in May, and in June, the bank told financial institutions to stop processing digital currency transactions. Bloomberg reports that one major reason for the Chinese crackdown on cryptocurrencies is the amount of energy needed to mine cryptocurrency transactions. China is in the midst of an energy crisis that has already affected many other industries.
Cryptocurrency prices were down sharply in late-morning trading following China’s announcement.