China Declares Cryptocurrency Transactions are Illegal

China’s central bank said all cryptocurrency-related transactions are illegal and must be banned, sending the strongest signal yet on its determination to crack down on the industry.

In a statement posted on its website on Friday afternoon, the People’s Bank of China said that all cryptocurrencies, including Bitcoin and Tether, are not fiat currency and cannot be circulated on the market. All crypto-related transactions, including services provided by offshore exchanges to domestic residents, are illicit financial activities, the PBOC said in the statement.

Cryptocurrencies weakened following the statement. The price of bitcoin fell more than 8%, compared with its level at 5 a.m. ET Thursday, before paring some of those losses. The cryptocurrency fetched just under $41,370 per bitcoin, according to CoinDesk. Ether tumbled more than 11% to trade at about $2,795.

Naming bitcoin, ether and tether as examples, the central bank said cryptocurrencies are issued by nonmonetary authorities, use encryption technologies and exist in digital form, and shouldn’t be circulated and used in the market as currencies.

It also said it is illegal for overseas exchanges to provide services for residents in China through the internet.

China banned cryptocurrency exchanges from operating within its borders several years ago, but individuals in the country have continued to find ways to trade bitcoin and other digital currencies via over-the-counter or peer-to-peer transactions.

Regulators in other countries have increasingly warned that cryptocurrencies need greater oversight. In the U.S., Gary Gensler, the chairman of the Securities and Exchange Commission, has said that investors need more protection in the cryptocurrency market, which he called “rife with fraud, scams and abuse” and compared to the “Wild West.”