China on Friday declared that all cryptocurrency transactions and mining are illegal, The New York Times reports.
Chinese authorities said in a statement that agencies will work closely to “punish” illegal cryptocurrency activities to prevent the “hidden risks caused by the blind and disorderly development” of the industry and the effect of cryptocurrency mining on greenhouse gas emissions.
The Chinese central bank announced that cryptocurrency transactions would be prohibited and ruled that foreign cryptocurrency exchanges that service users in China are illegal.
Effectively, it is not illegal to own bitcoin or similar cryptocurrencies but it is illegal to do anything with them.
There have been growing concerns about the necessary electricity needed to power computers that mine cryptocurrencies because of its effect on carbon emissions.
Chinese officials worry that the growing industry could badly damage the country’s goals to go carbon neutral by 2060.
Bitcoin’s price fell by about 7% after the announcement.
Other countries have also cracked down on cryptocurrencies but many users have been able to find workarounds by using VPNs to hide their locations.
American officials have also expressed concerns about overseas cryptocurrency exchanges.
Many governments have struggled to keep up with the growing $2 trillion cryptocurrency sector, which has grown exponentially in recent years.
American policy makers have also met in recent months to discuss regulatory frameworks.
But some smaller countries have embraced crypto. El Salvador recently adopted bitcoin as a legal tender and is buying up bitcoins on the market.
China pushes their own e-currency:
The move comes as China’s central bank is testing its own digital currency, the electronic Chinese yuan.
The bank in its announcement said that bitcoin and ether were being issued by “non-monetary authorities,” suggesting that their e-Yuan would not be affected by the changes.
China previously banned domestic cryptocurrency exchanges but has been a big hub for mining operations.
But since May, Chinese officials have moved to shut down mining operations.