China declares all cryptocurrency transactions illegal in its toughest move yet

China's central bank said on Friday that all cryptocurrency-related transactions are illegal financial activity, the strongest step yet in a series of measures against the sector.

The notice, issued with several other government bodies, states that services such as trading, token issuance and derivatives involving crypto are banned. It also says that overseas exchanges offering services to residents of mainland China over the internet are conducting illegal activity, and that staff working for such platforms in China could face investigation.

The move follows a campaign earlier this year that forced most bitcoin mining out of the country. Beijing has also warned about speculation and financial risk.

At the same time, China is testing its own digital currency, the e-CNY, run by the central bank. Some analysts see the crackdown on private crypto and the development of a state digital currency as two parts of the same strategy: keeping control over money and payments.

Crypto prices fell after the announcement, though the reaction was smaller than after earlier Chinese measures, as much of the activity had already moved offshore. Key open questions include how strictly the ban will be enforced against individuals, and whether exchanges will move quickly to exit the Chinese market entirely.