Bitcoin and Ethereum prices drop after China makes crypto transactions illegal in latest crackdown
CRYPTOCURRENCY prices have dropped after China announced a fresh crackdown on the digital coins.
Bitcoin feel by as much as 5.5% and Ethereum plunged by around 6% at the time of writing, according to Coinmarketcap.
China's central bank announced that all cryptocurrency trading is illegal in the country and mining the tokens is banned.
The People's Bank of China (PBOC) said: "Virtual currency-related business activities are illegal financial activities."
The country previously banned financial institutions from offering crypto related transactions, and warned investors against speculative trading in them.
Prices also plunged in June when the country restricted mining in the southwest province of Sichuan.
It's not Beijing's first move against digital currency - in 2017, China shut down its local cryptocurrency exchanges.
Despite the war on crypto, Chinese mines power nearly 80% of the global trade in cryptocurrencies.
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While crypto creation and trading have been illegal in China since 2019, further crackdowns this year by Beijing warned banks to halt related transactions and closed much of the country's vast network of bitcoin miners.
Thursday's statement by the central bank sent the strongest yet signal that China is closed to crypto.
The PBOC said today it will "resolutely clamp down on virtual currency speculation, and related financial activities and misbehaviour in order to safeguard people's properties and maintain economic, financial and social order".
It said that trading of virtual currencies had become "widespread, disrupting economic and financial order, giving rise to money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities."
Bitcoin, the world's largest digital currency, and other cryptos cannot be traced by a country's central bank, making them difficult to regulate.
The crypto crackdown opens the gates for China to introduce its own digital currency, which it is already working on and will allow the central government to monitor transactions.
Cryptocurrency prices have plunged across the board, including Tether, Cardano and XRP.
The top 50 coins in the crypto market were almost all down on Friday (September 24).
The price of cryptocurrencies are volatile, meaning they can go down as well as up, and in the blink of an eye.
And like today, action by governments and regulators can influence the price.
They are not regulated, meaning you have little protection if something goes wrong.
You should only invest money you can afford to lose and in financial products you understand.
The Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
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Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
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