‘Move necessary to prevent and control the risk of speculation in virtual currency transactions’
China’s central bank told a Beijing-based software firm on Tuesday to shut down over suspected involvement in cryptocurrency transactions, and has warned companies against assisting crypto-related businesses.
The People’s Bank of China (PBoC) said in a statement that financial and payment institutions are banned from providing operating venues or commercial promotions to cryptocurrencies after ordering the closure of the software company Beijing Qudao Cultural Development.
The move was necessary “to prevent and control the risk of speculation in virtual currency transactions, and protect the safety of the public’s assets,” according to the central bank.
In the statement, the PBoC warned firms “not to provide business premises, commercial display, marketing… for virtual currency-related business activities.”
The move comes amidst China’s ongoing crackdown against cryptocurrencies as authorities continue to close mines minting the virtual currencies in several districts that supply more than half of the world’s digital tokens.
Bitcoin mining is a digital process that generates new units of the virtual currency by solving complex mathematical equations which require energy-intensive computer operations.
As China makes a majority of the world’s cryptocurrencies, experts have pointed out that even the slightest regulations restricting their production in the country have the potential to create huge swings in the global market.
China has intensified crackdowns against cryptocurrency mining in provinces including Sichuan and Qinghai since June, shutting down mines along with periodic warnings to banks to halt crypto-related transactions. Social media accounts of some crypto-influencers were also blocked.
Last month, the country called on major banks and payments companies to take stronger actions against the trading of the virtual currencies, lowering the price of bitcoin by as much as 10 per cent the same day.
In May, three Chinese authorities – the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China – announced that they would be launching a widespread crackdown on cryptocurrencies, which sent the market down by as much as 25 per cent over the course of the day.
The moves, which the country has deemed necessary for achieving its climate crisis targets, have collectively led to the price of bitcoin and several leading digital currencies to dive in value since their April high. Crypto mining and transactions consuming large quantities of energy.
While people in China can still hold cryptocurrencies, they would continue to find it harder to use them.