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China issues blanket ban on cryptocurrency trading; Bitcoin, Coinbase, Robinhood slide

China issues blanket ban on cryptocurrency trading; Bitcoin, Coinbase, Robinhood slide
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The People’s Bank of China issued a blanket ban on cryptocurrency trading Friday, declaring all forms of digital transactions and financing as ‘illegal activities that are strictly prohibited”.

The statement, the latest in several attempts to reign in the growth of cryptocurrency and digital coin trading in the world’s second-largest economy, also banned overseas exchanges from providing services to mainland investors in China via internet.

The PBOC has been developing its own state-backed digital currency system, known as DCEP (Digital Currency Electronic Payment) for a number of months, that officials aim to use as a replacement for paper and coins in the world’s second-largest economy.

“The notice clearly stated that virtual currency exchange, virtual currency trading as a central counterparty, provision of matching services for virtual currency transactions, token issuance financing, and virtual currency derivative transactions are all illegal financial activities and are strictly prohibited,” the PBOC said in its statement. Transactions are “resolutely banned in accordance with the law”.

Bitcoin prices fell 8.35 per cent lower in the wake of the PBOC statement, and were last seen changing hands at $41,035.00 (U.S.) each.

Coinbase Global (COIN) shares slumped 3.9 per cent lower to $228.30 each in pre-market trading, while Robinhood (HOOD) shares were down 2.4 per cent at $44.80 each.

Earlier this spring, the PBOC said digital currencies should not be used in either financial markets or the real economy as money, given that they are not “real currencies”, adding that China-based financial and payment institutions are not allowed to price products in any digital currency and a banned from any digital token issuance.

The China internet Finance Association, the China Banking Association and the China Payment and Clearing Association also issued a join statement echoing the PBOC’s concerns at the time.
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