Bitcoin falls as China declares crypto deals ‘illegal’
The price of Bitcoin and other cryptocurrencies fell
The People’s Bank of China has declared all cryptocurrency payments illegal, delivering an unexpected dose of uncertainty into the money markets.
The Bank’s website outlines joint government guidelines for handling cryptocurrency trading, declaring the currency as illegal.
A statement posted on the Central Bank’s website today says that “virtual currency does not have the same legal status as legal currency.”
The bank said that as crypto currencies including Bitcoin and Ether are issued by non-monetary authorities “they are not legal and should not and cannot be used as currency in the market.”
The directive, which sent Bitcoin dropping as much as 5.5%, comes as global markets grow increasingly concerned over a debt crisis involving Chinese property developer Evergrande.
The world’s cryptocurrencies lost about $188 billion in market value within just three hours of China’s announcement, according to crypto-data website CoinMarketCap.
The Bloomberg agency said the Chinese government may also be responding to signs that miners are disguising their activities to stay in business.
China’s central bank has been getting tougher on cryptocurrencies. In May it declared a crackdown on crypto mining, causing the market to crash and cutting Bitcoin’s price by half.
In June, the bank said cryptocurrency services “disrupt financial stability and increase the risk of illicit activities such as cross-border asset transfers and money laundering.”
Institutions, it said, must refrain from providing cryptocurrency-related services.