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China's central bank declared all transactions involving Bitcoin and other virtual currencies illegal because it disrupts the financial system and is used in money laundering and other crimes.
While promoters of cryptocurrencies say they allow anonymity and flexibility, Chinese regulators worry they might weaken the Communist Party's control over the financial system and help conceal criminal activity.
Meanwhile, the People's Bank of China is developing an electronic version of the country's yuan.
Cashless transactions using the digital yuan can be tracked and controlled by the Chinese government.
