China banned all crypto transactions and vowed to stop illegal crypto mining, delivering the toughest blow yet to the trillion-dollar industry.

Crypto-related transactions will be considered illicit financial activity, including services provided by off-shore exchanges, the People’s Bank of China said on its website. It added that cryptocurrencies, including Bitcoin and Tether, are not fiat currency and cannot be circulated.

It’s the harshest step yet that China’s taken against crypto and strikes at the heart of a market that’s boomed this year and attracted enthusiasts including billionaire Elon Musk. China has long expressed displeasure with crypto because of its ties to fraud and money laundering, and excessive energy usage.

Bitcoin slumped in the wake of the announcement, falling 6% to about $41,800 as of 7:05 a.m. in New York. China’s strict approach is part of the reason why Bitcoin prices collapsed in May and have struggled to regain previous all-time highs above $60,000.

While there are probably still Chinese onshore speculators, activity has already shifted out of the country over the years amid increasingly stringent regulations, says Clara Medalie, the research lead at data provider Kaiko.

“News out of China definitely impacts markets because it can shake market sentiment, but the actual effect of another Chinese ban has minimal impact on underlying market structure at this point,” she said.

China is home to a large concentration of the world’s crypto miners, who require massive amounts of power and thus run afoul of the nation’s efforts to curb greenhouse-gas emissions. The country is a dominant player in crypto and as recently as April had a 46% share of the global hash rate, a measure of computing power used in mining and processing, according to the Cambridge Bitcoin Electricity Consumption Index.

Investors should expect “knee-jerk price reaction as China takes the wind out of Bitcoin’s sails,” said Antoni Trenchev, co-founder of crypto lender Nexo. “The recent rebound from just below $40,000 has likely run its course for now.”

Bitcoin and other virtual currencies are back on the defensive after a rebound from July lows. In the U.S., regulators are also now issuing strong warnings to the industry that it’s in danger of echoing the toxic culture before the 2008 financial crisis. Earlier this month, the Securities and Exchange Commission sent a notice to Coinbase Global Inc. that it could be sued for offering proposed accounts with high interest rates.

Vijay Ayyar, head of Asia Pacific with cryptocurrency exchange Luno in Singapore, said that while the Chinese government has made similar statements in the past, it is “a slightly nervous environment for crypto with the recent SEC comments and overall macro environment with the Evergrande news. So any comments of this nature will cause a selloff in risky assets.”

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