China's Central Bank deemed all cryptocurrency-related transactions unlawful on Friday, ratcheting up the country's anti-cryptocurrency campaign.
A statement on the People's Bank of China website says, "Virtual currency-related commercial operations are unlawful financial activity."
Beijing will prohibit all financial institutions, payment firms, and internet platforms from allowing bitcoin trading, according to the notification. The news sent cryptocurrencies soaring, with Bitcoin plummeting below $42,000 before stabilizing, and Ethereum, the second-largest cryptocurrency, plummeting more than 10% to below $2,800. This year's volatility in global cryptocurrencies has been fueled in part by Chinese laws aimed at stifling the industry.
According to the bank, cryptocurrency trading has disrupted "economic and financial order, spawning unlawful and criminal activities such as gambling, illegal fund-raising, fraud, pyramid schemes, and money laundering, and gravely threatening the protection of people's property."
Furthermore, China's central bank has declared "the supply of services by overseas virtual currency exchanges to Chinese people using the internet" to be unlawful.
China has long been critical of cryptocurrencies, citing, among other things, their ties to money laundering and high energy usage. Chinese regulators reinforced an old prohibition against financial companies from actively assisting in the mining and sale of cryptocurrencies earlier this year. Beijing has also taken steps to crack down on digital currency mining, which consumes a lot of energy, as well as domestic and international currency transactions. Despite its opposition to Bitcoin, Ethereum, and other cryptocurrencies, Beijing hopes to be one of the first governments to launch its own digital currency, the e-yuan.