China’s bitcoin ban deals heavy blow on the crypto

The People’s Bank of China just doesn’t find any use for bitcoin.

In a reposted September 15 memorandum, PBOC addressed the country’s bitcoin prohibition on its website, which resulted in widespread selling of the crypto, including a Friday morning price crash.

Cryptocurrencies and related transactions are now considered taboo in China, PBOC said Friday.

Bitcoin fell 5% following the news. Smaller coins, which normally climb and drop alongside bitcoin, also fell. Ether was down 10% and so did XRP.

These cryptocurrency services include exchange services and derivatives trading provided by foreign companies to Chinese locals.

The news also comes in the wake of global markets already feeling the heat over the debt turmoil being faced by property developer China Evergrande Group.

For national security

The PBOC clarified the ban was necessary for social stability and national security and would protect investors from risks.

The move comes after China’s State Council vowed in May to clamp down on bitcoin mining and trading as part of broader efforts to prevent financial risk, triggering a massive crypto selloff.

In a statement, the PBOC said “financial institutions and non-bank payment institutions are not allowed to offer services to activities and operations tied to digital currencies.”

‘Not legal’

China’s central bank called on financial institutions to help it prevent Chinese citizens from trading bitcoin through virtual exchanges — both locally and abroad.

China’s regulators pointed to illicit activities surrounding cryptocurrency: money laundering, pyramid schemes, and gambling — that play havoc on the economy. The memo specifically named bitcoin, ether and tether as main examples.

Chinese authorities have already been cracking the whip on crypto mining since the second quarter of this year. Regions like the mining center of Sichuan have been at the crosshairs of the government in the last few months.

The memo made it clear that bitcoin is “not legal” and cannot be used as currency in the market or circulated.

Image courtesy of Cointelegraph News/YouTube

Source: https://bitcoinerx.com/blockchain/chinas-bitcoin-ban-deals-heavy-blow-on-the-crypto/