China declares itself against cryptocurrencies

The declaration of People’s Bank of China about activities linked to cryptocurrencies has not left anyone indifferent. These activities include transactions, mining and their advertising, and consider that all activities are illegal and criminal. This has led to numerous speculations about whether currencies could permanently stop operating in the Asian country.

Last Friday, the central bank and nine other government institutions of the Asian country, including the internet regulator and the ministry of intelligence, decided to make public a statement. In it they stated that «Virtual currency transactions are illegal and criminal«.

The regulators specifically pointed to the money laundering; illicit fundraising; fraud; or pyramid schemes. They have assured that all these crimes have increased in recent times, after the arrival of cryptocurrencies; and therefore considers that they put the properties of citizens in great danger.

The People’s Bank of China specifically mentioned Ethereum and Bitcoin, as well as other virtual currencies issued by non-monetary authorities; and recalled that its status is not the same as legal tender currencies. For this reason, They cannot be used in the market as currency.

The document has also required the country’s local authorities to strengthen supervision, with the intention of prevent and eliminate the risks of speculation. This information was a blow to cryptocurrencies, which suffered falls that finally stabilized at around 6%. Thus, the influence of the information coming from the Asian country was noticed in the market, once again being the one in which China puts cryptocurrencies to work; and all this waiting for your digital asset.

A new ban in China

This is not the first time that China has declared cryptocurrencies illegal; or that either chooses to prohibit the use or mine it due to excessive use of the energy it needs. In fact, these bans have occurred on more than seven occasions since 2013.

Every time this happens, the markets react with a price drop, although it must be taken into account that this has increasingly less impact and duration. In this way, it is expected that this trend will continue in the future, since there will surely be new positions against cryptocurrencies, just as they have occurred over the last few years.

Viajy Ayvar, an analyst at Luno, one of the main cryptocurrency exchanges based in London, was optimistic despite the Chinese ban, as he believes that these currencies have been banned more times than they might think. For him, although China’s position is not new, it is a warning. «It has been enough to divert the markets into negative territory. «Investors had already shown their nervousness since the US Securities and Exchange Commission (SEC) took a tougher line regarding cryptocurrencies,» he commented.

On the other hand, other analysts highlight that there has been a change with respect to the previous measures taken in China, since now, those people involved, «they risk being prosecuted«. This is because the People’s Bank of China itself, in its statement, made it clear that «violators will be investigated for criminal liability in accordance with the Law»; and indicated that it will take crackdown on digital currency speculation and other financial activities related to them.