China regulators to ban crypto trading and speculation

Out-Law News | 08 Oct 2021 | 9:31 am | 1 min. read

Chinese authorities have banned all virtual currency trading and speculation.

All ‘cryptocurrency’ related business activities are “illegal financial activities” and strictly prohibited, according to a joint announcement by China’s central bank and nine other government departments.

Oversea crypto exchanges providing services to Chinese domestic residents via the internet are considered as illegal financial activities. Financial and non-bank payment institutions are banned from providing services related to cryptocurrencies.

The authorities said China will tighten regulation on internet content and access, market entity registration and advertising related to cryptocurrencies.

On the same day, China’s National Development and Reform Commission (NDRC) issued another notice saying that the country would crack down on the ‘mining’ of cryptocurrencies as part of its efforts to reduce carbon emission.

NDRC said China will tighten its regulation of the whole process of cryptocurrency mining and strictly prohibit new mining projects. It said such activities should be labelled as "to be eliminated".

Power generation companies are not allowed to provide electricity to cryptocurrency miners or financial support for launching new cryptocurrency mining projects.

Leo Xin of Pinsent Masons, the law firm behind Out-Law, said: “We have seen China’s continuous actions and efforts to crack down on crypto-related business. Not only crypto trading but also crypto mining is banned. The policy has been changed dramatically in this industry. In the past years, virtual currency mining had been encouraged and been big business in some central-west provinces in China.”

“However, now the Chinese government views virtual currency mining as high energy consumption industry and had restricted energy supplies to these miners. More and more miners have been moving overseas,” he said.

In August, China’s central bank announced that it would maintain tight regulation of cryptocurrency activity. In May China banned financial institutions and payment companies from offering services related to cryptocurrency trading and warned investors not to get involved in cryptocurrency trading.