China bans financial institutions and payment companies from providing services related to cryptocurrency transactions. Under the ban, banks, online payment channels, must not offer any services involving cryptocurrencies, like trading, registration, and clearing settlement.
Three Industry bodies the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China warned the companies.
They said in a joint statement, “Recently, cryptocurrency prices have skyrocketed and plummeted and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”
China has only banned crypto exchange and initial coin offering services but not barred individuals from holding cryptocurrencies.
An institution should not provide saving, trust, or pledging services of cryptocurrency nor issue a financial product-related cryptocurrency.
These were not the first moves of Beijing against the digital currency. In 2017, China shut down its local cryptocurrency exchanges, smothering speculative market accounted for 90% of global bitcoin trading.
In 2019, the People’s Bank of China said it would block access to all domestic and foreign cryptocurrency exchanges. Also block Initial Coin Offering websites, aiming to clamp down on all cryptocurrency trading with a ban on foreign exchanges.
The statement also highlighted the risk of cryptocurrency trading, saying virtual currencies “are not supported by real value”. Also said that anyone can easily manipulate the price and Chinese law does not backup any trading contracts.
The crypto market correction comes at a time when China has well developed CBDC program on digital yuan. China already started digital yuan trials in different regions. It also allowed payments using digital yuan in the shopping festival.
