- Three Chinese associations released a report on a crypto ban in the county that has triggered FUD.
- The organizations noted that cryptocurrency has “no real value support”.
Three Chinese associations have released a report on the ban on financial institutions and payment companies across the country regarding offering crypto services. The self-regulatory bodies are the China Banking Association, the National Internet Finance Association of China, and the Clearing Association of China. These organizations have reinforced the crypto ban that prevents financial organizations in China from all crypto-related services.
According to the three industry bodies, the high volatility in cryptocurrencies affects the “normal economic and financial order” in China. Firstly, the organizations noted that crypto is not backed by any monetary authority. They specified that virtual currency is not real money and should not, and cannot, be used as fiat currency in the market.
China reiterates cryptocurrency ban
The report reiterated China’s stance on financial institutions, payments services, and other relevant institutions not providing any services that involve crypto. The self-regulatory bodies added:
They must not use virtual currencies to price products and services, and must not directly or indirectly provide customers with other services.
Further, the report highlighted that no financial institution must help customers in trading, clearing, or registering crypto. Also, payments companies must not accept or use cryptocurrency as a payment or settlement tool.
In addition, the organizations urged financial institutions and other relevant bodies to look out for any crypto transaction by customers. Also, they pressed the involved institutions to terminate any transactions related to crypto. The organizations also added that institutions should report such activity to the appropriate authority.
In the report, the organizations encouraged consumers to educate themselves about cryptocurrency. The industry bodies believe that consumers should be aware of the risks with crypto. The report also warned against the loss of property and rights through cryptocurrency.
Consumers must increase their awareness, establish correct investment concepts, refrain from participating in virtual currency trading hype activities, and beware of personal property and rights damage.
In addition, the three associations said they would “strengthen the self-discipline supervision of their member units.” Thus, any member who violates regulatory regulations will be sanctioned.
The associations mentioned that the penalties include suspension of membership rights, industry notification, and cancellations of membership.
China’s crypto ban exempts investors and traders
Notably, the ban of crypto services on financial and payment institutions does not affect virtual currency traders in China. Chinese investors and traders will have to opt for other means like peer-to-peer (P2P) channels to conduct their crypto transactions.
China’s ban on crypto servicing came after the Central Bank of Nigeria (CBN) banned all commercial banks from providing crypto exchange services. At the time, CBN also warned that the announcement was a reminder of earlier warnings on crypto services. The bank also added that violators would face severe sanctions from regulators.
Also, the CBN ordered the closure of all business and personal accounts associated with crypto. Despite the ban, Nigeria remains the largest crypto market in Africa. Crypto traders in the company have opted for P2P trading since the ban. Reports showed that Nigeria reached $1.5 billion in peer-to-peer trading volume.