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China's central bank bans cryptocurrency trading to avoid 'risk'

China's central bank bans cryptocurrency trading to avoid 'risk'

The People's Bank of China, the country's central bank, said on Friday that cryptocurrency transactions are illegal, adding that such currencies "do not have legal tender status" and therefore "cannot be circulated in the market as currency."

In a statement, the bank said that bitcoin and other virtual currency transactions have disrupted the economic and financial system, leading to "an increase in money laundering, illegal fundraising, fraud, pyramid schemes and other illegal and criminal activities."

Crypto transactions are now considered criminal financial activity in China, the bank said, and the country will "completely curb the promotion of virtual currency transactions, severely curtail illicit financial activities and illegal criminal activities related to virtual currencies, will protect the security, property, people according to the law, and will do everything possible to maintain economic and financial order and social stability."

Friday's announcement is the culmination of the ongoing crackdown on crypto in the country; The Chinese government began issuing warnings about trading in mined cryptocurrencies in May, and in June, the bank asked financial institutions to stop processing digital currency transactions. Bloomberg reports that a major reason for Chinese crackdown on cryptocurrencies is the amount of energy required to trade cryptocurrencies. China is in the midst of an energy crisis that has already affected many other industries.

Cryptocurrency prices fell sharply in late-night trading following China's announcement.

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