Cryptocurrency: China Bans Bitcoin, Ethereum and other such virtual currencies  

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 New Delhi, 25th September 2021: China has taken a big step and declared all types of transactions done in Bitcoin and other such virtual currencies illegal. It has also started a campaign to ban the use of digital currency in an unauthorized manner. The central bank of the People’s Bank of China (PBC) said in the notice that bitcoin, ethereum and other digital currencies disrupted the financial system.

Chinese banks banned Cryptocurrency in 2013, but the government issued a reminder letter this year. This suggests that there is a concern at the official level regarding Cryptocurrency. The government is concerned about the damage to the financial system due to transactions using such currencies. Promoters of the cryptocurrency say Chinese regulators worry they could undermine the ruling Communist Party’s control over the financial system. It is also said that it can help hide criminal activity.

PBC said virtual currencies have no legal tender status. Bitcoin and other cryptocurrencies such as Ethereum and Tether are not issued by monetary authorities and have no legal tender power and therefore should not be circulated as legal tender. All illegal financial activity is strictly prohibited and will be terminated in accordance with the laws, PBC said.

Government agencies will step up enforcement and prohibit power generation firms, especially small companies, from providing electricity for cryptocurrency mining activities, while strictly banning their supply of electricity to mining firms, the statement said.