China Bans Financial Firms From Handling Crypto Transactions

China Bans Financial Firms From Handling Crypto Transactions

China has banned financial institutions and payment companies from providing services related to cryptocurrency transactions and has warned investors against speculative crypto trading.
It was China’s latest attempt to tackle what was a burgeoning digital trade market. Under the ban, these institutions, including banks and online payment channels, must not offer customers any services involving cryptocurrencies, such as registration, trading, clearing and settlement, three sector organizations said Tuesday in a joint statement.

“Recently, cryptocurrency prices have soared and fallen, and speculative cryptocurrency trading has rebounded, seriously undermining the security of people’s property and disrupting the normal economic and financial order.” they said in the statement. The three industry organizations are: the National Internet Finance Association of China, the China Banking Association, and the China Payment and Clearing Association.

China has banned cryptocurrency exchanges and initial coin offerings, but has not stopped individuals from holding cryptocurrencies.

Institutions should not provide cryptocurrency savings, trust or pledging services, or issue cryptocurrency-related financial products, the statement also said.

No digital tokens

Bitcoin and other major cryptocurrencies collapsed after the People’s Bank of China issued a statement reiterating that digital tokens cannot be used as a form of payment.

The biggest token fell 7.3% to $ 40,139 in Asia on Wednesday, continuing a weeklong slide triggered by comments from Tesla founder Elon Musk on the company’s holdings of currency. Ether, Dogecoin, and last week’s sensation, Internet Computer, were also down.

These movements were not Beijing’s first steps against digital currency. In 2017, China shut down its local cryptocurrency exchanges, stifling a speculative market that accounted for 90% of global Bitcoin trade.

In June 2019, the People’s Bank of China released a statement saying it would block access to all domestic and foreign cryptocurrency exchanges and initial coin offering websites, with the aim of cracking down on all cryptocurrency exchanges with a ban on foreign exchanges.

The statement also highlighted the risks of cryptocurrency trading, claiming that virtual currencies ‘are not supported by real value’, their prices are easily manipulated, and trading contracts are unprotected. by Chinese law.


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