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China Bans All Cryptocurrency Transactions

By:
Chris Gaetano
Published Date:
Sep 24, 2021
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The Chinese central bank has declared that all cryptocurrency transactions are illegal, a move that effectively shuts down the entire sector there, the Wall Street Journal reported. While the bank named Bitcoin, Ether and Tether as examples, the order applies to all cryptocurrencies. It said that, because they are issued nonmonetary authorities, use encryption technologies and exist in digital form, they shouldn’t be circulated and used in the market as currencies. The country has also made it illegal for overseas exchanges to provide services for residents in China through the internet, which was likely added to account for people circumventing the country's previous ban on domestic exchanges. 

Further measures indicate the government is fully prepared to crack down on the industry. The central bank called for a comprehensive monitoring system that would give local governments the power to monitor their regions for "illegal financial activities" such as mining and flag early warnings. Further, the country intends to also investigate employees of foreign exchanges currently in China, as well as others in the industry who advertise and provide crypto-related services. 

While the central bank said that the order was to protect the public from the risks of cryptocurrency trading, the Journal noted that it comes at a time when the government is going forward with plans to issue its own digital currency; it is possible that China has concerns that other digital tokens would be rivals to their own, thus undermining the monitoring and control that underpins the project. 

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