The People’s Bank of China issued a circular expanding the ban on cryptocurrency transactions for businesses and recognizing them as illegal financial activities.
According to the regulator, any business operations using cryptocurrency instruments, as well as intermediary activities related to the exchange, provision of information and consulting services, are recognized as illegal financial activities in China. Violation may result in criminal liability. After the publication of this document, bitcoin and most altcoins collapsed within 10%
Services of foreign cryptocurrency exchanges provided to Chinese citizens are also included in the category of prohibited operations. Legal entities, non-profit organizations and individuals who know or should know that they are engaged in business related to virtual currency and still provide them with marketing, payment and settlement, technical support and other services will be prosecuted for wrongdoing.
The situation is nowhere near as dire as it is reported in many media outlets, and the NBK has not even announced anything fundamentally new. The document published by the Central Bank of China does not prohibit citizens from owning cryptoassets and direct exchange of them, if it does not relate to commercial activities, as well as conducting investment activities outside the country.
However, if the investment activities of a legal entity, a non-profit organization or an individual violate public order and customs, then the relevant civil legal acts will be invalidated, the perpetrators will be held accountable under the law, and the losses arising in connection with this will also be imposed on them. …
Bits.media comment
The market’s reaction to the new PBC ban was quite modest compared to previous attacks by the “Chinese dragon”, and this is understandable. In fact, this is only an extension of the previous prohibitions, clearing the field for the widespread introduction of the digital yuan, and it was expected.
Exchange and OTC trading of cryptocurrencies, ICO and other methods of issuing and selling tokens in China have been banned for several years. Banks and other financial institutions are prohibited from conducting transactions related to cryptocurrencies. Mining is also almost completely banned on the territory of mainland China, which caused the flight of miners to other jurisdictions in the spring. These bans have been in effect for a long time and have been taken into account by the market.
Thus, the new sanctions of the NBK can no longer cause any significant shifts in the cryptocurrency market. This is a purely “paper” attack that fixes the current status quo. Of course, the small cryptocurrency business still remaining in China will be forced to change jurisdictions following the rest of their “unfortunate colleagues.” For example, manufacturers of ASIC miners, software developers for cryptocurrency services, and any other companies that still accept payments in cryptocurrencies and exchange them for Chinese yuan will have to think about this.
It is also likely that additional documents will be published soon or clarifications given by NBK officials, who will clarify the picture of the new “cryptocurrency reality” in China.
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