China Officially Bans Financial Companies From Offering Cryptocurrency Services

China Officially Bans Financial Companies From Offering Cryptocurrency Services

Today – May 18, 2021. China banned financial institutions and payment service providers from offering any services related to cryptocurrency transactions. 

This is China’s latest attempt to curb the digital trading market. 

According to Reuters, “Under the ban, such institutions, including banks and online payments channels, must not offer clients any service involving cryptocurrency, such as registration, trading, clearing and settlement, three industry bodies said in a joint statement on Tuesday.”

The industry bodies are known as the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China.

The industry bodies also cited speculative trading of crypto, “as infringing on the safety of peoples property and disrupting the normal economic and financial order”

Although China has banned crypto exchanges and ICOs, individuals may still hold cryptocurrencies. Individuals may not use cryptocurrencies to make transactions or pay for goods and services. 

At this time, it appears that it is still legal to mine and produce crypto currency miners for sale overseas.

Throughout the day, crypto currency prices have been dropping. Binance Coin (BNB) was down ~20% in the last 24 hours, Ethereum (ETH) down ~15%, and Bitcoin (BTC) down ~13% making them some of the biggest losers today. 

This isn’t the first time the Chinese government has made attempts to clamp down on digital currencies. 

In 2013, China’s central bank imposed a similar ban of financial institutions from conducting bitcoin transactions.

Again in 2017, China’s government stymied cryptocurrencies by declaring initial coin offerings illegal. This contributed to the first significant crash of Bitcoin prices in the last 5 years.

In addition to Elon Musk’s Tweets prompting a Bitcoin sell off, Bitcoin prices fell nearly 30% in the last week making it one of the most significant dips since March 2020. 

Both events appeared to have triggered a significant sell-off. Perhaps we’ll see further corrections to the cryptocurrency market in the coming weeks like we saw in 2017.