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In this photo illustration, the Bitcoin logo is seen on a mobile device with the flag of the People’s Republic of China in the background. (Photo Illustration by t / SOPA Images / LightRocket via Getty Images)
Budrul Chukrut | SOPA Pictures | LightRocket | Getty Images
China’s central bank on Friday renewed its firm pitch on bitcoin, calling all digital currency activities illegal and pledging to crack down on the market.
In a question-and-answer session posted on its website, the People’s Bank of China said that services offering trading, order matching, token issuance and derivatives for virtual currencies are strictly prohibited. Overseas crypto exchanges providing services in mainland China are also illegal, the PBOC said.
“Foreign virtual currency exchanges that use the Internet to provide services to domestic residents are also considered illegal financial activity,” the PBOC said, according to a CNBC translation of the comments. Foreign crypto exchange workers will be investigated, he added.
The PBOC said it has also improved its systems to strengthen oversight of crypto-related transactions and eliminate speculative investments.
“Financial institutions and non-bank payment institutions cannot offer services to activities and operations related to virtual currencies,” the bank said, reiterating past comments.
The price of bitcoin has fallen more than 3% on a 24-hour basis, last trading at around $ 42,239, according to data from Coin Metrics. Ethereum, the second largest digital asset, fell 7% to $ 2,860.
Highly crypto-exposed stocks also fell in pre-market trading, with Coinbase down almost 4%, MicroStrategy down 5% and Riot Blockchain down more than 6%.
This is not the first time that China has been tough on cryptocurrencies. Earlier this year, Beijing announced a crackdown on crypto mining, the energy-intensive process that verifies transactions and strikes new currency units. This resulted in a sharp drop in the processing power of bitcoin as several miners took their equipment offline.
The PBOC has also ordered banks and non-bank payment institutions like Ant Group, a subsidiary of Alibaba, not to provide crypto-related services.
In July, the central bank asked a Beijing-based company to shut down for allegedly facilitating digital currency transactions with its software.
– CNBC’s Evelyn Cheng contributed to this report.
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