- Beijing has announced all activity relating to digital coins is now “illegal”, intensifying recent restrictions on cryptocurrencies
- The move could further perturb investors amid a crackdown on finance and tech companies in China
Crypto bulls often say bitcoin is heading “to the moon”. Now they can’t even send it to China legally.
In a potentially damaging blow for cryptocurrencies, Beijing declared on Friday that all activity relating to digital coins is now “illegal”.
China’s central bank, which this year has been piloting its own digital currency, had already banned domestic financial institutions from providing cryptocurrency transactions in May. But now Chinese traders will apparently also be restricted from using foreign exchanges to buy bitcoin.
The announcement immediately sent shockwaves through the crypto world, which has long touted cryptocurrency’s potential as a global medium of exchange, free from the oversight of national regulators. But even as the world’s second-largest economy placed restrictions on its use, experts argue the anonymous nature of cryptocurrency transactions will make it difficult for authorities to stamp them out completely.
Bitcoin was trading at $42,447 (£30,884) at the time of writing, having dropped 5 per cent below its value on Thursday and reversed gains made earlier last week. Ethereum, another popular cryptocurrency, fell 7 per cent.
China’s blanket ban is another sign that Beijing is much more willing to get tough on crypto than other governments, who have largely tiptoed around the issue of regulation.
But the latest restrictions also continue a broader crackdown on China’s finance technology sector, as officials seek to rein in less centralised parts of the economy. This month, the Financial Times reported authorities were pursuing a further break-up of Alipay, the payments superapp whose owner Ant Group was also forced to suspend its IPO plans by Beijing last year.
The Chinese government has also riled investors recently with its ongoing clampdown on businesses that, like crypto, are particularly popular among China’s youth. In August, local tech companies were hit with new rules restricting children to just three hours of gaming per week, before state media launched a tirade against the rise of celebrity fan culture on China’s social media platforms.
