Bitcoin Use Suffers Steep Decline in China

Bitcoin transactions originating from China fell to 10% from 90% of the global total, the country’s central bank said Thursday (March 3).

As Bloomberg reported, that drop is in part due to the Chinese government’s ongoing campaign to curb cryptocurrency trading in mining.

Last year, the People’s Bank of China said that all cryptocurrencies and related transactions are now considered illegal in China.

Read more: China Court Rules Crypto Transactions ‘Illegal’; Violators Face 10 Years in Prison

The bank said the move was a national security measure, designed to also protect investors from risk. The PBOC pointed to illicit activities tied to cryptocurrencies — gambling, pyramid schemes, money laundering — mentioning bitcoin by name.

In February, China’s Supreme Court established penalties for violating the country’s prohibitions against engaging in cryptocurrency transactions.

Such transactions fall under the umbrella of “illegal fundraising,” and carry a penalty of at least 10 years in prison and a $79,100 fine.

As Bloomberg notes, China was at one time the center of the crypto world, birthplace of major crypto exchanges such as Huobi and home to a vast majority of newly mined coins.

China’s announcement comes against the backdrop of a debate among international finance regulators on how to stop Russia from using cryptocurrency to get around the sanctions imposed on it following its invasion of Ukraine.

See also: EU Eyes Tougher Measures to Block Crypto Use to Circumvent Sanctions

As PYMNTS reported earlier this week, the European Union is looking for new ways to make sure digital assets aren’t used to by Russia to avoid the sanctions. The nations are trying to enforce financial penalties on Russia, which have included barring Russian banks from the SWIFT communication system.

French Finance Minister Bruno Le Maire said the EU was considering measures to “further increase the effectiveness” of sanctions, to ensure there were no ways to circumvent them, including with cryptocurrency.

Meanwhile, European Central Bank President Christine Lagarde has said there should be legislation that makes sure firms engaged in issuing crypto assets or providing services aren’t dealing with Russian clients.