The step led to a steep fall in the prices of cryptos.

Regulators in China came together to impose a blanket ban on all crypto transactions including mining. The leading crypto, bitcoin, fell sharply following the action, and is currently trading at $42,183, down nearly 6%, after touching a low of $40,750. (Reuters)

This was the first time that as many as ten regulatory agencies, including the PBoC, securities, financial, and foreign exchange, joined hands in a concerted move to stamp out illegal crypto activity. Financial institutions and payment companies are already prohibited from transacting or providing any services relating to cryptos.

The authorities also issued a nationwide ban on cryptocurrency mining and said in a statement that they would coordinate to punish illegal crypto mining to prevent “hidden risks” and to enable China to achieve its climate goals.

PBoC

The People’s Bank of China (PBoC), the Chinese central bank warned that it will “resolutely clamp down on virtual currency speculation, and related financial activities and misbehavior in order to safeguard people’s properties and maintain economic, financial and social order.”

The bank said that it considered as illegal financial activity the internet-based transactions offered to domestic investors by overseas digital exchanges. It said: “Bitcoin and other virtual currency transaction hype activities … [have been] disrupting economic and financial order, breeding money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities, and seriously endangering the safety of people’s property.”

The moves against cryptos by China’s regulators echo the fears of many other governments that a decentralized currency such as bitcoin could bypass fiat currencies and thereby dilute their control of national financial and monetary systems. Other apprehensions include financial crime and the damage to the environment from the energy intensive process of mining bitcoin.

“In the history of crypto market regulation in China, this is the most direct, most comprehensive regulatory framework involving the largest number of ministries,” said Winston Ma, NYU Law School adjunct professor, to Reuters.

Related Story: Why Bitcoin Miners Love The Xinjiang Province In China