China's central bank has issued yet another warning to companies against assisting crypto-related businesses.
On Tuesday, China's central bank told a Beijing-based software firm to shut down due to suspicions of involvement in cryptocurrency transactions, and companies have been warned against supporting cryptocurrency-related businesses.
Following the closure of the software company Beijing Qudao Cultural Development, the People's Bank of China (PBoC) issued a statement prohibiting financial and payment institutions from providing operational venues or commercial promotions to cryptocurrencies.
The decision was essential “to avoid and manage the risk of speculation in virtual currency transactions, as well as preserve the safety of the public's assets,” according to the central bank.
The PBoC urged businesses not to provide “business premises, commercial display, promotion... for virtual currency-related business activities” in the statement.
The move comes as China continues to tighten down on cryptocurrencies, with officials closing cryptocurrency mines in numerous districts that supply more than half of the world's digital tokens.
Bitcoin mining is a digital process that involves solving difficult mathematical equations that necessitate energy-intensive computer processes in order to generate fresh units of the virtual currency.
Experts have pointed out that because China produces the majority of the world's cryptocurrencies, even the tiniest restrictions on their production in the nation have the ability to cause large fluctuations in the worldwide market.
Since June, China has stepped up its crackdown on cryptocurrency mining in regions such as Sichuan and Qinghai, shutting down mines and issuing periodic warnings to banks to prevent cryptocurrency-related transactions. Some crypto-influencers' social media profiles were also deactivated.
Last month, the country called on major banks and payment companies to adopt tougher measures against virtual currency trade, prompting a 10% drop in the price of bitcoin on the same day.
Three Chinese authorities – the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China – announced in May that they would be launching a nationwide crackdown on cryptocurrencies, sending the market down by up to 25% in one day.The steps, which the country sees as crucial to meet its climate-change goals, have caused the price of bitcoin and several other digital currencies to plummet from their April highs. Cryptocurrency mining and transactions use a lot of energy.
While Chinese citizens can still own cryptocurrencies, they will find it more difficult to use them.