How China’s new crypto ban breaks with the past – Quartz
In China, the crypto market is under constant threat, but it has never been completely closed. This may be about to change.
Chinese regulators clarified Friday, September 24, that cryptocurrency transactions and mining are illegal, the country’s strongest stance against non-government-issued currencies to date. In a statement, the People’s Bank of China (PBOC) said the rules are necessary to “maintain national security and social stability.”
China has taken steps to curb the rise of cryptocurrency since at least 2013, but with the boom in crypto markets in 2021 and the gradual rollout of the Chinese state-backed digital yuan, the government is becoming more serious in its fight against crypto.
A timeline of China vs. crypto
The Chinese government views cryptocurrencies as illegitimate, a risk to the financial sector, a drain on the environment, and something it cannot fully control. Until now, China’s fight against crypto assets has mostly consisted of a piecemeal set of restrictions placed on the industry. Its actions have gradually shifted from clamping down on individual institutions to banning virtually all crypto activity with its latest announcement. Here’s a look back at what happened:
- China bans banks from processing bitcoin transactions, calling them “virtual good” and not legal tender.
- BTC China, the country’s largest bitcoin exchange, stops accepting yuan deposits under pressure from payment processors and the government.
- Amid a crypto boom, China said it was investigating market manipulation and money laundering through bitcoin.
- China is considering eliminating crypto mining, but ultimately refuses to act.
What’s up with the latest crackdown in China?
Nine different government agencies joined the central bank in its statement on Friday. Unlike its previous restrictions, this time around China is issuing a blanket ban on all business transactions and transactions that affect crypto.
In its statement on Friday, the PBOC referred to bitcoin, ether and even stablecoin by name, saying they are not “legally repairable” and should not be used. (Stablecoins are typically pegged to the value of fiat currencies, but China makes it clear that they don’t go through with government regulators.)
Now, not only are financial institutions no longer able to provide support to crypto-related businesses, but so are marketing and information technology providers, according to the ordinance. In other words, all crypto holders or miners are now completely cut off from legal business transactions in China.
“While this is not a surprise that China has ‘banned’ crypto several times in the past, this time there is no ambiguity,” tweeted PricewaterhouseCoopers crypto leader Henri Arslanian. âCrypto transactions and crypto services of all kinds are prohibited in China. No room for discussion. No gray areas.