China’s central bank, the People’s Bank of China (PBOC), has escalated its long-standing battle against cryptocurrencies by officially declaring all related activities illegal. In a statement published on its website, the PBOC made it clear that services offering crypto trading, order matching, token issuance, and derivatives are strictly prohibited.
The ban also extends beyond China’s borders. Overseas cryptocurrency exchanges catering to Chinese users have been deemed unlawful, with authorities vowing to investigate foreign crypto service providers and their employees.
“Overseas virtual currency exchanges that use the internet to offer services to domestic residents are also considered illegal financial activity,” the PBOC stated, reinforcing its aggressive stance on digital assets.
Market Turmoil as Bitcoin and Ethereum Prices Sink
Following China’s renewed crackdown, Bitcoin dropped over 6.5% within 24 hours, trading around $41,882, while Ethereum fell by 9% to $2,867. Several crypto-linked stocks also took a hit, with Coinbase, MicroStrategy, and Riot Blockchain registering notable losses on the Nasdaq.
China’s move comes amid increasing regulatory pressure worldwide, with governments tightening control over the decentralized financial sector.
Not China’s First Crypto Crackdown
This isn’t the first time Beijing has taken a hard stance against cryptocurrencies. Earlier this year, the Chinese government launched a crackdown on crypto mining, citing energy concerns. The ban led to a sharp decline in Bitcoin’s mining power as miners relocated their operations overseas.
Additionally, financial institutions like Ant Group, an Alibaba affiliate, were ordered to cease providing services related to cryptocurrency transactions. In July, a Beijing-based company was also shut down for allegedly facilitating crypto trading through its software.
China’s Digital Yuan Push and Climate Targets
China’s latest crackdown aligns with its broader agenda—reducing carbon emissions and promoting its own digital currency. The country, the world’s largest carbon emitter, has set ambitious climate goals, aiming for carbon neutrality by 2060. Bitcoin mining, notorious for its high energy consumption, has been a target of regulatory restrictions.
Meanwhile, the PBOC is developing its own digital yuan, a state-controlled central bank digital currency (CBDC). China has already conducted multiple pilot programs for its digital yuan in different regions, reinforcing its push for a government-backed alternative to decentralized cryptocurrencies.
The Future of Crypto in China
With this latest policy shift, China has effectively outlawed all aspects of the cryptocurrency industry within its borders. Investors and businesses involved in digital assets will likely face mounting legal and operational challenges.
While some users may seek decentralized alternatives or move to overseas exchanges, China’s strict surveillance and enforcement measures could make it increasingly difficult to evade these restrictions.
As the world watches China’s bold move, the question remains: Will other nations follow suit, or will decentralized finance find new ways to thrive?