China bans cryptocurrency business

CHINA’S financial regulators have declared that cryptocurrency-related businesses should not be conducted by financial and payment institutions.

The financial industry bodies: National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China, made the declaration on Tuesday, 18 May 2021 in a joint statement reported by Reuters.

The statement reads: “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.”

While China has banned cryptocurrency exchanges and initial coin offerings, it is yet to bar individuals from holding cryptocurrencies.

The regulators instructed the financial institutions not to provide saving, trust or pledging services of cryptocurrency, nor issue financial product related to cryptocurrency, the statement also said.

The statement also highlighted risks of cryptocurrency trading adding that “virtual currencies are not supported by real value”, their prices are easily manipulated, and trading contracts are not protected by Chinese law.

While also calling on member institutions to abide by existing regulatory provisions regarding digital currencies, the trade associations also warned retail traders to be cautious of the risks involved in cryptocurrency investments.