Chinese financial move tumbles down cryptocurrencies

Friday, September 24th 2021 - 18:27 UTC

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Effective Friday, any foreign digital currency exchange that provides services to Chinese citizens through the internet is engaging in illegal activities

A regulatory decision Friday by The People’s Bank of China (PBOC) has led to a sharp fall in the price of cryptocurrencies such as Bitcoin and Ethereum, which have dropped over 6% and 10% respectively after bouncing back in previous weeks.

The measure causing such a financial collapse was no other than the declaration on the part of the PBOC that all financial transactions involving those assets were illegal.

After the announcement, Bitcoin lost over 6% of its value while Ethereum fell 10%. Bitcoin was trading around US $ 41,000, while Ethereum hit US $ 2,740 on its downward path.

“Commercial activities related to virtual currencies are illegal financial activities” which “seriously endangers people's assets,” said the PBOC in a statement.

The document also detailed that China's economy had been particularly hit by the two major cryptocurrencies.

The PBOC also warned Friday that anyone involved in providing support to an offshore exchange could come under investigation.

The PBOC also said that cryptocurrencies “should not, and are not capable of being circulated in the market and used as currencies.”

Any foreign crypto exchange that provides services to Chinese citizens through the internet is engaging in illegal financial activities, it went on. The Bank pointed out that any individual or entity providing supporting functions to offshore platforms were just as guilty.

“Any legal persons, unincorporated organizations, individuals who provide sales and marketing, payment settlement, technical support, who knowingly or should know that they are engaged in virtual currency-related business, will be investigated following the law,” the statement read.

Bitcoin had been in a clear recovery approaching US $ 45,000, despite the uncertainty in the markets due to the possible collapse of real estate giant Evergrande.