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China's central financial institution says all cryptocurrency-related exercise is against the law and guarantees crackdown

In this photo illustration, the Bitcoin logo can be seen on a mobile device with the flag of the People's Republic of China in the background. (Photo illustration by t / SOPA Images / LightRocket via Getty Images)

Budrul Chukrut | SOPA pictures | LightRakete | Getty Images

China's central bank renewed its tough talks on Bitcoin on Friday, calling all digital currency activity illegal and vowing to crack down on the market.

In a question and answer posted on its website, People & # 39; s Bank of China said that services that offer trading, order matching, token issuance and virtual currency derivatives are strictly prohibited. Overseas crypto exchanges offering services in mainland China are also illegal, the PBOC said.

"Overseas virtual currency exchanges that use the Internet to provide services to local residents are also considered illegal financial activities," the central bank said, according to a CNBC translation of the comments. Foreign crypto exchange workers are under investigation, she added.

The PBOC said it had also upgraded its systems to strengthen surveillance of crypto-related transactions and eradicate speculative investments.

"Financial institutions and non-bank payment institutions cannot provide services for activities and operations related to virtual currency," the central bank said, repeating previous comments.

Bitcoin's price fell over 6.5% in 24 hours and was last trading at around $ 41,882, according to data from Coin Metrics on Friday morning ET. Ethereum, the second largest digital asset, fell 9% to around $ 2,867.

Stocks with heavy crypto exposure also slumped in morning trading on Nasdaq, with Coinbase down 2%, MicroStrategy 5% and Riot Blockchain down over 6%.

It's not the first time China has been tough on cryptocurrencies. Earlier this year, Beijing announced crackdown on crypto mining, the energy-intensive process that verifies transactions and mints new currency units. This caused a sharp drop in Bitcoin's processing power as several miners took their equipment offline.

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The PBOC also ordered banks and non-bank payment institutions such as Alibaba subsidiary Ant Group not to offer crypto-related services.

In July, the central bank asked a Beijing-based company to shut down allegedly facilitating digital currency transactions using its software.

China's crypto penetration comes as Beijing tries to meet its climate goals. The country is the largest CO2 emitter in the world and has set itself the goal of becoming CO2 neutral by 2060.

The PBOC is also working on its own digital currency. China is seen as a leading competitor in the race for central bank-issued digital currency after trying a virtual version of the yuan in several regions.

– CNBC's Evelyn Cheng contributed to this report.

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