Financial institutions and payment firms in China have been prohibited from offering services related to cryptocurrency transactions, and investors have been cautioned against engaging in speculative cryptocurrency trading.
Is this a recent prohibition?
This ban, according to Cryptonews, is simply a reminder issued by the China National Internet Finance Association, the China Banking Association, and the China Payments and Clearing Association in a joint statement released by Shanghai Securities News and the Chinese state news agency, Xinhua.
Similarly, some analysts and supporters of digital currencies in the eastern world say that it is merely a reaffirmation of a rule that has been in place for a few years.
It was China’s new effort to stifle what had become a rapidly growing digital trading market. According to the ban, certain entities, such as banks and online payment platforms, must not provide clients with any cryptocurrency-related services, such as registration, trading, clearing, or settlement, according to a joint statement released on Tuesday by three industry groups.
“Recently, crypto currency prices have skyrocketed and collapsed, and speculative cryptocurrency trading has rebounded, seriously jeopardizing the protection of people’s property and undermining the usual economic and financial order,” they said in the statement.
While crypto exchanges and initial coin offerings have been banned in China, individuals are still allowed to hold cryptocurrencies.
The institutions must not provide cryptocurrency saving, trust, or pledging services, or issue financial products involving cryptocurrency, according to the statement.
Beijing’s actions against digital currency were not the first. China closed its local cryptocurrency exchanges in 2017, effectively suffocating a speculative sector that accounted for 90% of global bitcoin trading.
The People’s Bank of China announced in June 2019 that it will block access to both domestic and international cryptocurrency exchanges and Initial Coin Offering websites, including a ban on foreign exchanges, in an effort to crack down on all cryptocurrency trading.
The statement also emphasized the dangers of cryptocurrency trading, stating that virtual currencies “are not backed by real value,” that their values are easily manipulated, and that trading contracts are not secured under Chinese law.
The China Banking Association, the China Internet Finance Association, and the China Payment and Clearing Association are the three industry bodies.
Our Standards: The Thomson Reuters Trust Principles.