In a shocking move, the People’s Bank of China (PBOC) declared all cryptocurrency-related activities illegal in the country. In a Q&A published on their website, the PBOC announced that all services offering crypto trading, order matching, or derivatives are prohibited. The announcement means that overseas cryptocurrency exchanges can no longer legally provide their services in China. Trading crypto-currency had officially been banned in China since 2019 but had continued online through foreign exchanges. The PBOC stated that cryptocurrency trading “seriously endangers the safety of people's assets” as its reason for the law. The prices of Bitcoin and Ethereum each fell by more than 5% after the news.
Previously On...: Of course, this announcement has been a long time coming. In May, Chinese state-backed organizations warned buyers they would have no protection if they incurred losses from crypto-currency investment transactions. In June, the government told banks and payment platforms to stop facilitating transactions and issued bans on mining cryptocurrencies.
Zoom Out: China was one of the world’s largest cryptocurrency markets. Fluctuations in the country have often impacted global cryptocurrency prices. With its lower electricity costs and cheaper computer hardware, the country was one of the world's leading hubs for mining, which refers to using powerful computers to mint new coins. In September 2019, China accounted for 75% of the world's Bitcoin energy use. By April 2021, that had fallen to 46%.
