China is banning cryptocurrency use in the country. In the latest move this week, Chinese regulators have restricted financial institutions from providing any crypto-related services.
Giving the basis for the banning cryptocurrency People’s Bank of China judged that “Virtual currencies are not supported by any real value.”
On Tuesday, the financial industries in the mainland directed their members to not offer services such as account opening, registration, trading, and clearing of settlements, etc. Moreover, financial institutes cannot accept digital currencies as payment or settlements of transactions.
The directive from the National Internet Finance Association of China, the China Banking Association, and the Payment & Clearing Association of China urged banks and payment companies to closely monitor the flows of money involving cryptocurrency.
History of China Banning Cryptocurrency:
China has banned cryptocurrency multiple times in the past. In 2013 the government allowed its citizens to trade cryptocurrency online calling it a virtual commodity. However, soon afterward the financial regulators of the country banned bitcoin payments and other related services.
In 2017, China banned ICO (Initial Coin Offerings). ICO is a fundraising drive for new coins. The new crypto ventures offer it to collect the seed money for their start-up. Banning ICOs had many trading platforms shut their operations in China. The ban also restrained trading exchanges from providing account openings, registration, trading, and liquidation services.
By July 2018, close to 90 digital trading platforms had left the Chinese market.
The 2021 bull run was also cooled off by China’s fresh ban on virtual currencies. The financial industry warned that the speculative price of bitcoin was threatening the “normal economic and financial order.”
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This fresh banning of cryptocurrencies is making it hard for individual investors to buy, sell, and trade cryptocurrency. Nevertheless, banks and other financial services providers are also finding it hard to identify crypto-related money inflows.
The Twitter account of Bitcoin Association Hong Kong sarcastically mocked the repetitive banning of cryptocurrency by China.
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. https://t.co/cpUmUemSJr
— Bitcoin Association 香港比特幣協會 (@bitcoinorghk) May 18, 2021