The People’s Bank of China just released a note that effectively outlawed cryptocurrency in China. This note was issued to “the people’s governments of all provinces, autonomous regions, and municipalities under the Central Government, and Xinjiang Production and Construction Corps. That’s basically everyone in China – every Chinese citizen, anyway. They’re targeting what they’re called “virtual currency trading hype activities” of all sorts.
Per the release today, the People’s Bank of China is concerned that virtual currency trading hype activities are “disrupting the economic and financial order.” They’ve also claimed that this virtual currency trading is “breeding illegal and criminal activities” such as:
• Illegal fund-raising
• Money laundering
• Pyramid schemes
• Endangering the safety of people’s property
China’s release points specifically to “virtual currencies such as Bitcoin, Ethereum and TEDA.”
Part of the plan to remove the threat from China includes the banning of certain phrases in the names of registered market entities. The registered names and business scope of enterprises and individual industrial and commercial houesholds “must not contain words or content” such as:
• virtual currency
• virtual assets
• encrypted currencies
• encrypted assets
The release today from the Chinese government included several new rules and clarifications for entities inside China. “Virtual currency-related business activities are illegal financial activities,” makes clear that no person or business within China can conduct business with virtual currency of any sort.
The new rule set also included “the provision of services by overseas virtual currency exchanges to Chinese residents through the Internet” as an illegal financial activity. They also made clear that any legal person, unincorporated organization, or natural person who invests in virtual currency will be subject to the loss of said currency, as “the relevant civil legal acts are invalid.”
It is not clear how Chinese officials plan on enforcing the “loss” of said data. They did suggest that the proper authorities will “promptly shut down” all “internet applications such as websites, mobile applications, and small programs that carry out virtual currency-related business activities.” That bit is aimed at crypto mining, transfer, and payments.
This is the most massive and direct action the Chinese government has taken against cryptocurrency. It’ll be interesting to see how the market reacts, given past jumps and falls of crypto value when major government actions like these have occurred.