In China, virtual currencies do not have the same legal
status as legal currency, according to the notice. It also reiterates what has
been in place for years: cryptocurrency trading is illegal. The Chinese
government has provided additional information about its cryptocurrency ban.
"Recently, virtual currency
trading hype activities have increased, disrupting economic and financial order
and breeding illegal and criminal activities such as gambling, illegal
fundraising, fraud, pyramid schemes, and money laundering,"
according to the government.
The government's notice states that "virtual
currency-related business activities are illegal financial activities”. To
prevent these risks from materializing further, the government issued a notice
today clarifying its position on cryptocurrency. The notice also requests that
risk monitoring and early warning of virtual currency trading be strengthened.
This newly disclosed information has
already had an impact on the cryptocurrency markets. Bitcoin, the industry's
flagship cryptocurrency, has fallen nearly 4% in the last hour, while Ethereum
has fallen 3.3 percent in the same time frame.
The National Internet Finance Association of China, the China Banking Association, and the China Payment and Clearing Association all cautioned that cryptocurrency trading was a "speculative" activity.
China's turbulent relationship
with cryptocurrency The Chinese crypto industry has been put to the test this
year. China began cracking down on cryptocurrency mining in February, ordering
miners in provinces such as Inner Mongolia and Xinjiang to close their operations.
In May, a group of three payments and financial associations reaffirmed the
central bank's prohibition on firms engaging in cryptocurrency transactions.
