“This is the latest chapter of China tightening the noose around crypto,” said Antoni Trenchev,managing partner and co-founder of Nexo in London,a crypto lender.
Virtual currencies should not and cannot be used in the market because they’re not real currencies,according to a notice posted on PBOC’s official WeChat account. Financial and payments institutions are not allowed to price products or services with virtual currency,the note said.
Beijing since 2017 has abolished initial coin offerings and clamped down on virtual currency trading within its borders,forcing many exchanges overseas. The country was once home to about 90 per cent of trades but the lion’s share of mining and major players have since fled abroad.
China has recently taken steps toissue its own digital yuan,seeking to replace cash and maintain control over a payments landscape that has become increasingly dominated by technology companies not regulated like banks.
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“It’s no surprise to me,as Chinese capital controls can be challenged by cryptocurrency purchases in the country and transfers out of the country,” said Adam Reynolds,CEO for APAC at Saxo Markets.
“So avoiding use of them in the country is essential to maintaining capital controls. The only tolerable digital currency to a government with strong capital controls is their own CBDC.”