China’s Central Government Bans All Cryptocurrency Trading

China’s central government has banned all cryptocurrency transactions and vowed to stop all of its country’s cryptocurrency transactions, including crypto mining which has hammered the trillion-dollar industry.

Cryptocurrency-related transactions will be considered illegal, including services provided by out-of-country cryptocurrency exchanges, the Bank of China posted on its website on Friday. It stated that cryptocurrencies, including Bitcoin, are not legal currency and cannot be traded or circulated within China.

This is the harshest step yet the central government has taken against cryptocurrencies, it also strikes at the heart of the crypto market that has boomed all year. The crypto market also attracted billionaire Elon Musk.

China’s central government has long expressed displeasure with cryptocurrency because of its ties to organized crime and money laundering.

In the wake of the announcement, Bitcoin slumped, falling 6% to about $41,800 in the US. The central government’s harsh approach is one of the main reasons Bitcoin prices collapsed in early May. Bitcoin and other cryptocurrencies have since struggled to regain previous all-time highs.

China is home to a huge concentration of bitcoin miners, who require a massive amount of power which runs afoul of Beijing’s efforts to curb greenhouse gas emissions from its coal electric plants.

China’s traders have been the dominant players in the crypto market. Furthermore, as recently as April 2021 China’s crypto traders had a 46% share of the global hash rate. The hash rate is a measure of computing power used in mining and processing.

Source: Bloomberg News