Under the new legislation, companies may not offer customers any services such as registration, trading or savings in the digital currencies.
"Recently, cryptocurrency prices have risen soaring and plummeted, and speculative cryptocurrency trading has returned, seriously affecting the security of human property and disrupting normal economic and financial order," three Chinese authorities said in a joint statement.
According to the statement, the currencies are not based on anything of real value, prices can be easily manipulated and agreements on the currencies lack protection under Chinese law.
Stop for "mining" in parts of the country
China has previously expressed skepticism about cryptocurrency and in 2017 forced all crypto exchanges in the country to close, which then accounted for 90 percent of world trade in bitcoin.
Recently, the development of cryptocurrency, so-called mining, was also banned in Inner Mongolia in northern China.
China is experimenting with a digital variant of its yuan, and the country's central bank may be the first major in the world to introduce a virtual variant of its own currency.
Analysts see that such a currency could cause problems in the crypto markets, and lead to panic sales if it sucks up liquidity from other digital currency trading platforms, according to Bloomberg.