According to Bitcoin proponents, the desire of Chinese regulators to control and conceal criminal activity is reflected in the tightening of financial regulations, which they claim is a result of their efforts.
Even in other countries, regulators have expressed concern that cryptocurrencies will necessitate more stringent controls than the ones that are currently in place in their jurisdictions.
A statement from the People’s Bank of China states that all Bitcoin and other virtual currency transactions are now considered illegal in China, according to the statement (PBC). The move is part of a broader campaign by the PBC to discourage the general public from using illegal digital currency, which is currently underway.
The central bank’s website prohibits financial activities such as virtual currency derivatives and other similar products, as well as other similar products.
Digital currencies such as Bitcoin, Ethereum, and other cryptocurrencies, according to a notice issued by the PBC, are causing financial system disruptions and are being used for money laundering and other illegal activities.
A significant drop occurred in the value of coins that represented different digital currencies as a result of the announcement. Coins such as Bitcoin and other crypto tokens saw their value plummet by 9 percent in the hours following the announcement, reaching $41,085 dollars. On average, the price of Ethereum has dropped from $3,100 to approximately $2,800 since the beginning of the year, representing a loss of nearly 10%.
In a second consecutive attempt, Chinese authorities have attempted to contain a global phenomenon while also attempting to create a domestic equivalent. Because it banned WhatsApp and Google from its territory, China, for example, invested in the development of WeChat and Baidu. As well as social media behemoths like Facebook, YouTube and other video-streaming platforms are off-limits to the group.
Officials in China are working on the creation of an electronic Yuan that will be used for cashless transactions and will be easily trackable and regulated by financial regulators.
Earlier this year, the Chinese government reminded banks that they were prohibited from dealing with cryptocurrencies, which they had done in 2013. In September 2017, the government of the country declared initial coin offerings (ICOs) to be illegal under the laws of the country. (ICOs). In addition, officials were concerned that cryptocurrency mining and trading could continue, or that the state-run financial system could be exposed to risks in a secondary manner as a result of this. This decision was made as a result of the concerns expressed.