The Central Bank of the People's Republic of China, along with nine other government agencies, has said that cryptocurrency and all crypto transactions are illegal. The organizations want to do more to detect and be able to stop trades.
The bank and other organizations said in an "announcement to counter the popularity of virtual crypto transactions and reduce risks from them" that Bitcoin and other cryptocurrencies "disrupt economic and financial order," promote money laundering and enable illegal fundraising. Other illegal and criminal activities such as fraud and pyramid schemes would also be made easier by crypto.
Therefore, the organizations want to clarify that virtual currencies are not legal means of payment in China and that financial service providers operating in China may not facilitate transactions. Virtual exchanges, crypto trading and other crypto services are "strictly prohibited," according to the announcement. Foreign companies are also not allowed to offer crypto services to Chinese residents, the announcement states.
In the announcement, the government agencies also propose three measures to be taken to be more effective in countering crypto trading. The first step is for national and regional bodies to cooperate better. The central bank, the Central Cyberspace Service and the Ministry of Public Security are mentioned as departments that will coordinate more.
The second measure is that monitoring systems that the Chinese government now uses to track crypto must become better at monitoring and early warning. This system should also be able to track the popularity of coins more accurately and efficiently. All departments and regions must monitor illegal transactions more closely, both online and offline.
In the third measure, the government will create a "crypto transaction risk prevention and mitigation system." In addition, financial management organizations, cybersecurity firms and telecommunications departments, among others, must start working closely together to take payment channels, websites and apps offline. Crypto providers should be monitored more closely and more attention should be paid to their advertising capabilities.
In June, the central bank also indicated that banks and payment platforms should not support cryptocurrency. At that time, new measures were also put in place to make crypto mining less easy. Electricity companies in the Sichuan region, for example, were then required to indicate when a customer had a relatively large electricity consumption.