China bans financial institutions and payment companies from providing services through cryptocurrency transactions
Just when you think the bad news is over for bitcoin, the Chinese government just dropped another hammer on all cryptocurrencies. On Tuesday, three Chinese banking and payment industry bodies issued a statement banning financial institutions not to conduct virtual currency-related business, including trading or exchanging fiat currency for cryptocurrency, according to a report from Reuters.
In addition to the ban, the bodies also warned investors against speculative crypto trading. The ban is China’s latest attempt to clamp down on what was a burgeoning digital trading market.
As part of the ban, institutions including banks and online payments channels, must not offer clients any service involving cryptocurrency, such as registration, trading, clearing, and settlement, three industry bodies said in a joint statement on Tuesday.
“Recently, crypto currency 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,” they said in the statement.
In addition, the affected institutions must also not provide saving, trust, or pledging services of cryptocurrency, nor issue financial products related to cryptocurrency, the statement added.
In June 2019, the People’s Bank of China issued a similar statement saying it would block access to all domestic and foreign cryptocurrency exchanges and Initial Coin Offering websites, aiming to clamp down on all cryptocurrency trading with a ban on foreign exchanges.
Per Reuters, the statement also highlighted the risks of cryptocurrency trading, saying virtual currencies “are not supported by real value”, their prices are easily manipulated, and trading contracts are not protected by Chinese law.