China is yet again making news by tightening crypto regulations and introducing a new ban that prohibits financial institutions and payment companies from providing any crypto-related services.
This ban will forbid banks and online payment companies from providing any services related to cryptocurrencies such as registration, trading, clearing, and settlement of digital currencies according to a joint statement released earlier this month by three financial industry associations in China. These three industry bodies are the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China.
This was not China’s first attempt to bring cryptos to a halt, as they had shut down local crypto exchanges back in 2017, unravelling a market that accounted for approximately 90% of global Bitcoin trading.
“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,” was said in their statement.
They also made it clear that consumers would not be protected from any losses incurred from crypto-related investments and transactions.
The trading of cryptocurrencies has been illegal in China since 2019, and this new ban is taking it a step further, which is causing some panic in the industry and contributing to fluctuating market values.
Although crypto-related services and trading has been prohibited, and crypto exchanges, as well as initial coin offerings, are banned, China does not forbid individuals from owning or holding cryptocurrencies – not that this helps much if individuals are barred from using or trading their digital currencies.
“The institutions must not provide saving, trust or pledging services of cryptocurrency, nor issue financial product related to cryptocurrency,” was also mentioned in the statement.
It’s not only China that has been making moves toward cryptocurrency bans. South Korea has warned that crypto exchanges could be shut down following new regulations, and India had announced a new bill regarding the possible ban of cryptos earlier this year.
A major Seychelles-based crypto exchange, Huobi, had announced recently that it would stop selling Bitcoin mining machines and crypto-related services to new users in mainland China. OKEx, another crypto exchange also based in Seychelles, has said that its digital token OKB can no longer be purchased with the Chinese Yuan.
Both these exchanges operate in multiple countries, and compliance with China’s new regulations could be seen as a smart move and an aim toward future relations and trading – should China ease its grip on cryptos.
It is said that up until now, China has been responsible for between 65% and 75% of Bitcoin mining. These new regulations are forcing mining operations to possibly move to other countries such as Mongolia and Kazakhstan, where Bitcoin mining is feasible and potentially very profitable.