The People’s Bank of China, the country’s central bank, on Friday specifically targeted overseas cryptocurrency exchanges, saying it was illegal for them to provide online services to residents in China.
The move was an apparent attempt to fill a loophole that remained after the PBoC in May banned domestic financial institutions from providing cryptocurrency transaction services.
In the months that followed, Chinese traders continued to invest in cryptocurrency using foreign platforms.
The price of bitcoin fell more than 8% immediately after the announcement, falling to just over $ 41,000.
The PBoC said in its opinion on Friday that “there are legal risks to individuals and organizations participating in virtual currency and trading activities.”
He added that all Chinese nationals working for cryptocurrency exchanges abroad would be “investigated according to the law”, as would organizations providing them with marketing, payment and technical support.
The PBoC said it would work alongside the Ministry of Public Safety and the Internet regulator to crack down on “those who are suspected of undermining the financial order.”
Despite China’s crackdown, the country remains an important global crypto market. User-controlled crypto wallets believed to be in China received $ 150 million in digital coins from January through June, “behind the United States,” according to a report by analytics providers Chainalysis.
The PBoC said: “Recently, speculation in cryptocurrencies has increased, disrupting the economic and financial order, spawning illegal and criminal activities such as gambling, illegal fundraising, fraud, pyramid schemes and money laundering. All of this seriously endangers the safety of people.
The PBoC is separately preparing to unveil an official digital renminbi, making it a pioneering central bank in the region. The change is due for a trial during the 2022 Winter Olympics.
Jason Guthrie, head of capital markets and digital assets for asset manager WisdomTree in Europe, said: “China trying to ban crypto is just a continuation of a trend, but it is stepping up the rhetoric before the launch of the digital renminbi. ”
Provincial governments this year issued a series of bans on energy-intensive cryptocurrency mining activities.