China Bans Cryptocurrencies, Mining Projects

New Delhi: The Chinese authorities said on Friday that all cryptocurrency-related businesses are illegal and called for the exit of cryptocurrency mining projects.

Up to three-quarters of the world’s supply of bitcoin has reportedly been produced in China, but the process consumes vast amounts of electricity, and energy produced by coal-burning plants is a massive contributor to air pollution, Global Times reported.

Over the past several months, several large virtual currency mining centres in China, including in southwest China’s Sichuan Province and north China’s Inner Mongolia Autonomous Region have announced to shut down cryptocurrency mining projects partly out of consideration for energy consumption.

Virtual currencies have no legal tender status, the People’s Bank of China (PBC), the country’s central bank, said in a notice on Friday. Bitcoin and other cryptocurrencies like Ethereum and Tether are not issued by the monetary authorities and have no legal tender power, and therefore should not and cannot circulate as a legitimate currency, it said.

“All the illegal financial activities are strictly banned and will be eliminated in line with laws,” said the PBC, noting that those who committed crimes by engaging in relevant illegal financial activities shall be prosecuted for liabilities.

The statement is an extension of the country’s intensifying regulation on cryptocurrencies beginning from a meeting of the State Council’s Financial Stability and Development Committee in May. The meeting signalled that a further crackdown on virtual currency trading and mining activities is part of efforts to fend off financial risks from the root, Global Times said.

On Friday, ten other government agencies, including the National Development and Reform Commission (NDRC), the Ministry of Industry and Information Technology and the Ministry of Public Security listed cryptocurrency mining as a sector to be eliminated.

In addition, the statement said that government agencies will step up enforcement and firmly stop electricity generation firms, especially smaller ones, to provide electricity for cryptocurrency mining activities, while it’s strictly banned for mining firms to self-supply electricity.