China's financial institution has declared all transactions involving Bitcoin and other virtual currencies illegal, stepping up a campaign to dam use of unofficial digital money.
Friday's notice complained Bitcoin, Ethereum and other digital currencies disrupt the economic system and are utilized in money-laundering and other crimes.
"Virtual currency derivative transactions are all illegal financial activities and are strictly prohibited," the People's Bank of China said on its website.
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The price of Bitcoin fell quite 9 percent per cent, to US$41,085, within the hours after the announcement, as did most other crypto tokens. Ethereum skidded almost 10 per cent, falling from US$3100 to around US$2800.
Chinese banks were banned from handling cryptocurrencies in 2013, but the govt issued a reminder this year. That reflected official concern cryptocurrency mining and trading might still be happening or the state-run economic system could be indirectly exposed to risks.
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Promoters of cryptocurrencies say they permit anonymity and adaptability , but Chinese regulators worry they could weaken the ruling Communist Party's control over the economic system and say they could help to hide criminal activity.
The People's Bank of China is developing an electronic version of the country's yuan for cashless transactions which will be tracked and controlled by Beijing.
Regulators in other countries have increasingly warned that cryptocurrencies need greater oversight. In the US, Gary Gensler, the chairman of the Securities and Exchange Commission, has said that investors need more protection within the cryptocurrency market, which he called "rife with fraud, scams and abuse" and compared to the "Wild West."
The SEC has won dozens of cases against crypto fraudsters, but Mr Gensler says the agency needs Congress to offer it more authority and funding to adequately regulate the market.
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Regulators in China have also been trying to rein in cryptocurrency mining, an energy-intensive process whereby specialised computers generate digital currencies. As a result, miners are moving operations out of China.
Two years ago, China alone accounted for around three-quarters of all the electricity used for crypto mining, far and away the foremost within the world, consistent with the Cambridge Bitcoin Electricity Consumption index. By April of this year, before the newest crackdown, China's share had fallen back to 46 per cent. that also towers over the No. 2 country, the us , at but 17 per cent.
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