Several of China’s peak bodies for the financial sector have reiterated the country’s hard stance against cryptocurrency transactions with the issuance of a new ban on payments platforms and financial institutions providing any form of related services.
The National Internet Finance Association of China, the China Banking Association and the Payments and Clearing Association of China jointly issued the “Public Notice on the Prevention of Speculative Risk in Relation to Virtual Currency Transactions” (关于防范虚拟货币交易炒作风险的公告) on 18 May.
The Notice states that financial institutions and payments organisations are “not permitted to directly or indirectly provide services in relation to cryptocurrencies to customers,” including:
- Providing cryptocurrency registration, transaction, clearance or settlement services;
- Accepting cryptocurrencies or using cryptocurrencies as payments and settlements tools;
- Undertaking any services involving the conversion of cryptocurrencies into the renminbi or foreign currencies;
- Undertaking operations for the storage, hosting or pledging of cryptocurrencies;
- The issuance of financial products related to cryptocurrencies;
- Making cryptocurrencies investment targets for trusts or investment funds.
The Notice also prohibits financial and payments institutions from using cryptocurrencies for the pricing of products or services; providing insurance in relation to cryptocurrencies or including cryptocurrencies within the scope of insurance.
“Cryptocurrencies are a specific type of virtual commodity that are not issued by a monetary authority, and do not possess the qualities of money such as statutory status,” said the Notice. “They are not real money, and should not be employed as money for circulation in the market.
“Undertaking operations for the exchange of cryptocurrency and statutory money, serving as a dealer for cryptocurrency transactions, providing information intermediation and pricing services for cryptocurrency transactions, engaging in initial coin offerings and cryptocurrency derivatives transactions are all in breach of laws and regulations, and are criminal activities that may involve illegal fund-raising, illegal securities issuance, and illegal sale of tokens and notes.”
China first cracked down hard on its Bitcoin and cryptocurrency market in September 2017, when it issued a ban on initial coin offerings (ICO) and domestic token exchanges, due to concerns over risk in relation to speculative investment frenzies. The Chinese market had previously comprised around 90% of global bitcoin trading.