On Friday, China’s central bank announced one of the strictest bans on cryptocurrency: all cryptocurrency-related transactions are now deemed “illegal financial activities”. Any domestic or abroad organizations providing such services to Chinese users will be held legally responsible.

Details:

In a joint statement, 10 Chinese government agencies announced they would continue to tighten the grip on crypto trading to “protect the safety of people’s assets” and “maintain national security and social stability”.

The central bank said cryptocurrencies should not be circulated due to their digitized existence, encryption, and lack of legal indemnity.

Bitcoin price took a slight dive(5%), but Twitter’s announcement of its new crypto payment softened the blow.

Context:

China has been treading cautiously and maintaining a high-pressure control over internet finance since the dramatic fall of P2P (peer-to-peer lending). Yet, the newly issued blanket ban is the most rigorous regulation so far.

The government has previously criticized cryptocurrency repeatedly for its potential to enable untraceable transactions and illegal activities such as money laundering and tax evasion, according to a Pingwest report.

In June, The People’s Bank of China ordered financial institutions to monitor and blocklist any client involved in virtual currency transactions and tighten restrictions on Bitcoin mining.