Cryptocurrency crackdown by China is more than just about the ‘safety of people’s property’

China's fight against cryptocurrency isn't just about that

Chinese regulators have tightened restrictions banning financial institutions and payment companies from providing services related to Cryptocurrency that represents a new crackdown on digital coins.

Many of the new rules expand on previous restrictions targeting cryptocurrencies and fill in loopholes that had allowed some finance and payment companies to continue trading.

On Wednesday, the China Internet Finance Association, the China Banking Association and the China Payment and Clearing Association jointly issued a so-called “risk warning”, according to the state-run China Times. “Cryptocurrency prices have skyrocketed and fallen recently, and speculative trading has rebounded.

This seriously affects the security of people’s property and disrupts normal economic and financial systems, ”said the statement from the regulators overseen by the People’s Bank of China and the China Insurance and Banking Commission.

The guidelines were issued in a joint statement by the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China and published by the People’s Bank of China (PBOC).

In addition, institutions were prohibited from providing cryptocurrency savings, trust or pledging services and from issuing financial products related to Cryptocurrencies. Crypto-related information services, insurance and derivatives trading are also prohibited.

In 2013, the government defined Bitcoin as a virtual commodity and said individuals were allowed to freely participate in their online trades. Later that year, financial regulators, including the PBOC, banned banks and payment companies from providing Bitcoin-related services.

In September 2017, China banned Initial Coin Offerings (ICOs) to protect investors and contain financial risks. The ICO rules also prohibited trading platforms for cryptocurrencies from converting legal tender into cryptocurrencies and vice versa. The restrictions caused most of these trading platforms to close as many offshore companies moved.

The Chinese-oriented exchange, which also includes Binance and MXC, allows Chinese people to open accounts online. This process only takes a few minutes. They also enable peer-to-peer trades in OTC markets that help convert Chinese yuan into cryptocurrencies. Such transactions are processed through banks or online payment channels such as Alipay or WeChat Pay.

After the game, many expressed concern, including longtime American diplomat and former NATO ambassador Nicholas Burns, who noted, “The Chinese created a problem for us by removing our sanction levers.”

The Biden government has been slow to address the issue following last month’s report that it took a closer look at China’s digital currency plans. There have been reports of concern from the administration that efforts might be made with the move to compete with the dollar. However, government officials were “reassured” that China’s intentions in developing the currency were not to evade future US sanctions.

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