On the 24th September of 2021, China’s central bank and its National Development and Reform Commission announced that all crypto-currency transactions are to be considered illegal. Moreover, companies providing cryptocurrency trading services to Chinese citizens are considered to be effectively engaging in illicit financial activities and will therefore be committing a crime and risk facing prosecution should they continue providing their services. This also includes foreign websites outside of China which offer related services to Chinese citizens.
Although crypto-currency transactions had already been banned in China since 2019, Chinese citizens have been bypassing the ban through the use of foreign crypto exchanges. However, following this recent announcement numerous crypto exchanges, wallets and related companies declared that they will not be engaging in the provision of crypto services to users within the mainland of China anymore.
China has one of the largest crypto-currency markets in the world, to the extent that negative enforcement in China impacts the price of most crypto-currencies around the world. Indeed, in the wake of the announcement the price of Bitcoin fell by more than EUR 2,000. Notwithstanding, this is not the first attempt by China to ban crypto-currency transactions. It is in fact the nineteenth attempt of the sort. Since 2013, Chinese government agencies have been issuing a series of ever-increasing restrictions on crypto transactions, albeit not being conclusive legal prohibitions. However, this time they may be considered as being such.
Whether this restriction will hold or not is, as of yet, unknown. However, the ban on cryptocurrency transactions in China has not deterred the vision of the Chinese president for China to be a leader in blockchain. “The plan is to capitalise on the benefits of blockchain without crypto.” How this plays out is yet to be seen.
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