China’s central bank calls cryptocurrency-tied deals illegal, bitcoin drops

China's central bank is developing an electronic version of the country’s yuan

The People’s Bank of China on Friday called cryptocurrency-tied deals in the country illegal, sending bitcoin shares tumbling. 

The notice complained Bitcoin, Ethereum and other digital currencies disrupt the financial system and are used in money-laundering and other crimes.

"Virtual currency derivative transactions are all illegal financial activities and are strictly prohibited," the People’s Bank of China said on its website.

Promoters of cryptocurrencies say they allow anonymity and flexibility, but Chinese regulators worry they might weaken the ruling Communist Party’s control over the financial system and say they might help to conceal criminal activity.


The central bank said it will also take on illegal activities in trading and ban overseas exchanges from providing services to customers in the country, a Reuters report said. The ban will also reach into otherwise legal trading and will not allow financial companies and other overseas firms to facilitate these deals, the report said.

The Associated Press reported earlier this year that the Chinese central bank is developing an electronic version of the country’s yuan that could be tracked and controlled by Beijing.

The Associated Press contributed to this report.