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Cryptocurrencies are being used to finance "criminal and illegal activities," according to Chinese authorities. Photo: Pixabay.

China declares crypto illegal in hard hit to digital alternative currencies

The Central Bank of China associated transactions with digital currencies to money laundering and illegal fundraising operations.

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Alert the world markets, especially those that deal with cryptocurrencies. In an announcement on Friday, Sept. 24, the Central Bank of China declared financial transactions made with them illegal.

The strong regulatory move by the Chinese government was explained as a strategy to protect the property of citizens, which would be in danger according to the authorities of the Asian giant.

Sanctions

Through a statement from the Central Bank of China, it is warned that those who do not respect the regulations will be investigated for their criminal responsibility, as indicated by law.According to data from the Chinese authorities, as of June 2021, more than 1,000 people had been arrested for engaging in criminal acts to acquire cryptocurrencies.

Does Bitcoin tremble?

In the announcement, Bitcoin and Ethereum are referred to specifically, without neglecting other virtual currencies that circulate in the market, emphasizing that these types of digital coins do not have the same “status” as hard currency and are not valid in commercial transactions.

Especially due to these type of government measures, mainly from the Chinese government, which seek to protect the economy from financial speculation and money laundering, the price of cryptocurrencies has remained unstable over the last year.

Following the announcement by the Central Bank of China, Bitcoin fell more than 8%, XRP by 10%, and Ethereum by more than 11%. In the morning, U.S. time, Bitcoin was trading at $41,289. For its part, the markets watched what may happen to the shares of companies associated with cryptocurrencies, especially data mining firms listed on Wall Street.

Saving electricity

In mid-2021, the Chinese authorities ordered the suspension of any cryptocurrency mining operations in various regions of the country amid a campaign that warned about the high energy consumption of these activities.But beyond saving electricity, Beijing also seeks to reduce polluting emissions derived from the production of cryptocurrencies, as well as reduce financial risks.

A call to local authorities

The Chinese authorities warned that financial institutions, payment business and internet companies will be prohibited from facilitating the trade of these virtual currencies, and they called on local authorities to create a "system of prevention and elimination of risks of speculation.” 

The goal: to get cryptocurrencies out of the gray area of legality in all fields.

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