China's Supreme Court on Thursday declared cryptocurrency transactions illegal and said violators face heavy fines and up to 10 years in prison.

It is worth noting that last year, the highest state authorities of China already outlawed cryptocurrency. The current move makes cryptocurrency trading technically illegal and allows the government to take legal action against traders.

The country has cracked down on crypto mining and trading in 2021 due to severe energy shortages. Because of this, some firms have either moved their base to neighboring Singapore or closed their operations completely.

Up to this point, China has been the world's largest cryptocurrency miner. The corresponding ban in Kazakhstan has now led markets to view Russia as a major future force in crypto mining.

Responsibility for cryptocurrency trading

The court's recent ruling now provides for three to 10 years in prison and fines ranging from 50,000 yuan ($7,918.28) to 500,000 yuan for large transactions.

Small transactions can be fined between 20,000 and 200,000 yuan. The new law comes into force on March 1.

The Supreme Court decision also refutes rumors that cryptocurrencies cannot be completely banned by law in the country. The eastern province of Zhejiang recently raised electricity rates specifically for cryptocurrency miners, indicating that the government is trying to curb cryptocurrency mining with high bills rather than lawsuits.

Markets are not distracted from events in Ukraine

China's new threats have had little effect on the cryptocurrency market. The focus continues to be on Russia's military intervention in Ukraine. Markets rebounded overnight as demand for risky assets such as stocks improved.

Nevertheless, China is not abandoning crypto technologies in general. The country introduced its own digital yuan at the Winter Olympics.

NFTs are also a legal gray area in the country, albeit with some restrictions. Last year, the state news agency Xinhua released "digital collectibles" minted from the blockchain in the Tencent cloud.

Alibaba and Tencent, two of China's biggest tech companies, are investing in the NFT space. Last year, the e-commerce giant opened its own trading platform NFT.