China’s central bank has reiterated a nationwide ban on cryptocurrency, confirming that all transactions involving digital currencies, including mining and trading, are illegal.
According to a memo posted on the corporate website of the People’s Bank of China (PBOC) on Friday, “virtual currency-related business activities are illegal financial activities,” and “should not and cannot be used as currency in the market or circulated.”
In particular, the PBOC blamed cryptocurrencies for, “disrupting economic and financial order, breeding illegal and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering, seriously endangering the safety of people’s property.”
Although the use of cryptocurrencies has been banned in China since 2019, online trading has continued largely unabated until recently, with Beijing having clearly placed the sector in its cross hairs in 2021.
The crackdown has included China’s State Council announcing in May a ban on crypto mining within the PRC, while local regulatory bodies issued a joint statement at the same time banning financial institutions and payment companies from providing cryptocurrency services to customers in any way, including accepting cryptocurrency as payment.
Friday’s statement from the PBOC calls for online exchanges to be shut down and for financial institutions to monitor and report any person or business suspected of dealing in cryptocurrencies in any way.
“According to [information] transferred by the financial management department, the competent authorities of network information and telecommunications shall promptly shut down internet applications such as websites, mobile applications and [mobile app] mini-programs that carry out virtual currency-related business activities in accordance with the law,” it said.
Victoria White, Special Counsel and Technology Expert Lawyer for MdME Lawyers, said the PBOC’s announcement comes as no surprise given recent messaging.
“The Chinese authorities have maintained a consistent position on virtual currencies, prohibiting financial institutions from providing Bitcoin-related services to customers since 2013, and restricting organizations and individuals from carrying out virtual currency financing and trading activities,” she said.
“Enforcement seems to have been particularly active in the past few months. Recently, a reported case in the Chinese courts upheld that cryptocurrency assets are not recognized under the law and therefore have no legal protection. The ruling confirmed that cryptocurrency assets do not have legal status in China.
China’s crackdown on digital currencies comes as Beijing continues preparations for the launch of its own digital RMB, expected to be put into circulation by 2024, via extensive pilot testing across several Chinese cities.
Macau Chief Executive Ho Iat Seng also revealed in April that the Macao SAR Government is planning to amend its financial laws to allow for the introduction of China’s Digital RMB in the future – a move that could prove transformative for the city’s gaming industry.