China declares all virtual currency transactions illegal, sending bitcoin price to fall below $42,000

Remember back in June when China crackdown on cryptocurrencies? Bitcoin lost 7% of its value, falling as low as $32,105 after China banned financial institutions and payment companies from providing services through cryptocurrency transactions. Now China is back in the news as it wages a new war on cryptocurrencies.

Today, China intensified its crackdown on cryptocurrency trading on Friday, declaring that all virtual currency transactions are illegal, reinforcing the country’s tough stance against cryptocurrency rivals to government-issued money. The news quickly sends the crypto prices tumbling with Bitcoin falling as low as $41,376 as of the time of writing. Ethereum also lost over 8% of its value, falling to $2,810.88. Other cryptocurrencies (commonly known as altcoins) saw their prices tumbled by at least 5%, according to data from cryptocurrency tracking site, CoinMarketCap.

China’s central bank, also known as the People’s Bank of China, said on Friday that all cryptocurrency-related transactions are illegal. In a statement posted on its website on Friday afternoon, the bank said the latest notice was to further prevent the risks surrounding crypto trading and to maintain national security and social stability.

Chinese authorities also vowed to root out “illegal” activity and banning crypto mining nationwide, hitting bitcoin and other major coins and pressuring crypto and blockchain-related stocks. In a joint statement on Friday, ten Chinese government agencies, including the central bank as well as banking, securities, and foreign exchange regulators said they would work closely to maintain a “high-pressure” clampdown on the trading of cryptocurrencies.

As we reported back in May, China also banned financial institutions and payment companies from providing services through cryptocurrency transactions. Three Chinese banking and payment industry bodies banned financial institutions not to conduct virtual currency-related business, including trading or exchanging fiat currency for cryptocurrency,

The public security ministry said that by Wednesday afternoon police had busted more than 170 criminal groups involved in using cryptocurrencies to launder money. The money launderers charged their criminal clients a commission of 1.5% to 5% to convert illegal proceeds into virtual currencies via crypto exchanges, the ministry said via its official Wechat account.

Meanwhile, cybercriminals raked in over $3.25 billion annually from social media-enabled cybercrime as enterprises infected with crypto-mining malware doubled. Since 2017 there has been a 400 to 600 percent increase in the amount of crypto mining malware being detected globally, the vast majority of which has been found on social media platforms.