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  • May 18, 2021

China bans financial, payments firms from cryptocurrency business.

BEIJING (Xinhua) — Financial institutions and payment firms in China have been banned from offering services related to cryptocurrency transactions, and investors have been cautioned against speculative crypto trading.

It was China's most recent effort to stifle an emerging digital trading economy. According to the ban, certain organisations, 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 by three industry bodies on Tuesday.

“Recently, crypto currency prices have skyrocketed and collapsed, and speculative cryptocurrency trading has rebounded, seriously jeopardising the protection of people's property and undermining the usual economic and financial order,” they said in a statement.

China has outlawed cryptocurrency exchanges and initial coin offerings, but not cryptocurrency ownership.

The institutions must not provide cryptocurrency saving, trust, or pledging services, nor issue financial products related to cryptocurrency, according to the statement.

Beijing's actions were not the first against digital currency. China shut down 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 order to crack down on all cryptocurrency trading.

The statement also emphasised the dangers of cryptocurrency trading, claiming 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.