China Bans Institutions from Handling Crypto Business
The Chinese government has banned financial and payment institutions from managing crypto. This conclusion was arrived at by the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China.
What's the Nature of the Ban?
According to its statement, the Chinese government sees the ban as a necessity in covering loopholes of existing crypto policies in the country while adding more restrictions.
One of the inclusions bans institutions from providing cryptocurrency saving, trust or pledging services and issuing financial products related to cryptocurrencies. Crypto-related information services, insurance, and derivatives trading are also banned.
The ban prohibits financial institutions and payment institutions from taking/receiving payments, registering, and trading cryptocurrencies.
Citizens of China or people living in China are at liberty to hold cryptocurrency. Nevertheless, the new guidelines prohibit trading, exchanging, or offering any crypto-related services within the Chinese market.
The Chinese Government Does This Every Time...
The Chinese government has a track record of fighting against cryptocurrencies (as long as they are not in the digital yuan.) In 2013, while claiming an “indifference” to the burgeoning crypto industry at the start of the year, stances changed as the crypto market began to garner recognition. Financial institutions were ultimately banned from handling Bitcoin at the end of 2013.
In 2017, China hit the global market when they closed their local cryptocurrency exchange market. This action negatively affected global bitcoin trading. 2019 had its fair share of woes: the same People's Bank Of China (PBOC) issued a statement threatening to block access to all local and intentional crypto and ban foreign exchanges. As of 2021, the PBOC has communicated it was working on a Digital Yuan, which it plans to launch at the 2022 Beijing Winter Olympics.
After the statement signed by the PBOC had been released, Bitcoin went down by 7.3%. Coupled with news of Tesla’s non-acceptance of Bitcoin, and the unencouraging form of the crypto market in the last few days, China’s ban comes at a very interesting time.
The Chinese government asserts that the reason for banning cryptocurrency was because trading cryptocurrencies infringed on "the safety of people's property and disrupting the normal economic and financial order."
Although this new ban makes trading and exchange of cryptocurrency difficult in the Chinese market, crypto traders in China don't seem to be discouraged by it. A tweet from the Hong Kong Bitcoin association reads: “For those new to bitcoin, it is customary for the People’s Bank of China to ban bitcoin at least once in a bull cycle.”
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