The People’s Bank of China (PBOC) has released new guidelines that include mechanisms to crack down on all forms of crypto use in China.

China’s central bank has deemed all crypto-related transactions illegal and ordered the authorities to crack down on the country’s existing mining farms.

It also prohibits any foreign exchange trading platforms from providing their services within the country.

The new nationwide cryptocurrency ban has led to a sharp drop in the prices of cryptocurrencies including Bitcoin, Ethereum, and other altcoins.

While crypto enthusiasts are not really shocked by the move given that China has banned Bitcoin and other cryptocurrencies on a number of occasions in the past.

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Market insiders believe that the latest ban decisions and guidelines differ from previous measures because they came from the central bank itself.

Here is a look at the mechanics of crypto-ban in China:

1. Classification of cryptocurrency mining as an excluded industry:

Recent Chinese guidelines and decisions consider cryptocurrency mining to be an unlikely industry.

Previously, the Bitcoin mining activity in China benefited from low electricity fees, but the Chinese government placed cryptocurrency mining under the “cancellation category” in 2019 and indeed this activity was banned soon after.

2. The clear blocking signal towards Bitcoin, Ethereum and Tether:

The latest regulatory guidance specifically mentions Bitcoin, Ethereum and Tether as virtual assets that may contribute to and lead to the failure of the current Chinese monetary system.

3. The first central ban on cryptocurrency:

Prior to the latest crypto crackdown guidelines from the central bank, most of the early crackdown activities were carried out by state and provincial authorities.

Although centralized supervision, no prior regulatory action other than warnings has been directly issued.

This time, the Supreme Court, the Supreme Prosecution, the Ministry of Public Security, and the Foreign Exchange Department have all come together to ensure a complete ban on crypto-related activities.

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4. Local companies will be responsible for assisting foreign entities:

The current set of ban guidelines hold local business and technology solution providers responsible if dealings with companies associated with cryptocurrency trading are found.

5. The Chinese government will not protect people who suffer losses due to crypto:

The guidelines made it clear that there is no stipulation about the legality of cryptocurrencies.

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Anyone involved in cryptocurrency trading activities that violate public order will not qualify for any civil legal action. It means that the government will not come to save the citizen.

The true nature of the latest crackdown on cryptocurrency can be determined by how crypto giants such as Huobi, OKEx and Binance have reacted to the latest regulatory guidelines given that the majority of Chinese traders use these platforms.

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