The People’s Bank of China (PBOC) adopted a resolution effectively prohibiting any cryptocurrency-related company.
The PBOC claims that the surge in cryptocurrency trading has disrupted economic and financial stability in its announcement. It has also contributed to the rise of illicit and criminal activity, according to the central banks. Gambling, fraud, pyramid schemes, illegitimate fund-raising, and money laundering, according to the PBOC, pose a major threat to the safety of user’s belongings.
The PBOC published a statement to address the dangers associated with digital currency trading speculation.
The Chinese central bank’s first objective was to clarify that cryptocurrency does not have the same legal standing as legal currency. As a result, digital currency-related financial activities are ultimately illegal, per the PBOC.
The notification goes into greater depth about the behaviors that have been made illegal as a result of this situation. Any exchange involving cryptocurrencies is now illegal. This involves exchanging cryptocurrencies as a central counterparty and exchanging legal and cryptocurrencies. The PBOC deems overseas exchanges that provide services to Chinese residents to be illicit financial operations.
It is also unlawful to provide intermediate information and pricing services for cryptocurrency exchanges. This is applicable for token issuance financing, cryptocurrency derivatives, and other cryptocurrency-related financial activities.
The notice also detailed how Chinese officials plan to make the banning of cryptocurrencies easier to execute, including by coordinating departments and beefing up enforcement. The government also plans to improve risk monitoring and early warning systems for cryptocurrency exchange hearsay.