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China begins clampdown on cryptocurrency transactions

By News Desk

China has begun clampdown on cryptocurrency transactions by banning financial institutions and payment companies from providing services related to cryptocurrency and warned investors against speculative crypto trading.

As gathered, the move was China’s latest attempt to clamp down on what was a burgeoning digital trading market. Under the ban, such institutions, including banks and online payments channels, must not offer clients any service involving cryptocurrencies, such as registration, trading, clearing, and settlement.

Before the new development, China had before now banned crypto exchanges and initial coin offerings but has not barred individuals from holding cryptocurrencies.

Reacting to the new policy on Wednesday, the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China, through a joint statement, raised concerns that the currency rebound was against the safety of citizens’ property.

“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,” they said in the statement.

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

The moves were not Beijing’s first moves against the digital currency. In 2017, China shut down its local cryptocurrency exchanges, smothering a speculative market that had accounted for 90% of global bitcoin trading.

In June 2019, the People’s Bank of China issued a statement saying it would block access to all domestic and foreign cryptocurrency exchanges and Initial Coin Offering websites, aiming to clamp down on all cryptocurrency trading with a ban on foreign exchanges.

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

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