A notice posted on the Chinese central bank’s website says it is now illegal for anyone in China to buy cryptocurrency abroad. Cryptocurrency mining and supporting crypto companies has also been made against the law.
Beijing is trying to avoid capital flight, amid fears that the huge real estate group Evergrande could collapse.
Earlier this year, academics at the University of Cambridge estimated that 65% of global Bitcoin mining takes place in China.
In a statement, the People’s Central Bank of China (PBoC) said, “Business activities related to virtual currency are illegal financial activities.
They claimed that this “seriously endangers the safety of people’s property”.
In May, Chinese financial institutions were banned from providing cryptocurrency-related payments.
As a result, the value of Bitcoin has fallen by more than 20%.
A new crackdown in June, orchestrated by the PBoC, caused a further decline in value.
However, GlobalBlock, a UK-based digital asset broker, said it saw “little gut reaction” to the latest announcement.
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“The current adoption rate is important and it’s only positive for crypto.”
GlobalBlock pointed out that the Chinese crypto market has already proven to be very resilient.
They commented: “We have also seen this before in China where news of bans have been reported over the years, but that has not stopped the adoption of Bitcoin and digital assets from continuing their upward trend. . “
The state crackdown has already had a big impact on crypto mining in China.
A Cambridge Center for Alternative Finance study, published earlier this year, found that China’s share of crypto mining fell from 75.5% in September 2019 to 46% in April 2021.
Speaking to the BBC, David Gerard, author of Attack Of The 50 Foot Blockchain, said some Bitcoin miners have left China.
He said, “The miners are packing shipping containers with mining rigs so they’re actually mobile computer data centers, and they’re now trying to ship them out of China.”
The Evergrande Real Estate Group crisis has raised wider concerns about the health of China’s previously booming economy.
Writing for the Daily Telegraph, Ambrose Evans-Pritchard commented, “Deflating an economy that is so hyper-leveraged to property is going to take years and will be messy.
“China will almost certainly avoid a Minsky crisis, but it may not avoid a long period of half-slump that profoundly changes the world’s perception of the country.”