The Chinese government has announced he was going to crack down on financial institutions who are involved in the cryptocurrency industry, while also warning investors of the speculative nature of crypto trading.
The ban will prevent banks and other financial platforms from offering their customers any cryptocurrency-related services, including, but not limited to, their trading, clearing, and use.
The move follows on from China’s decision to shut down local crypto exchanges in 2017, which would be one of the biggest hits to the crypto market.
Two years later, in 2019, the People’s Bank of China also announced that it would block access to all cryptocurrency exchanges and initial coin offering (ICO) platforms by taking advantage of the country’s advanced regulations. on Internet access.
These checks have been viewed as a human rights violation by critics of the Chinese Communist Party (CCP).
The statement was released by the National Internet Finance Association of China, the China Banking Association and the China Payment and Clearing Association, 3 of the country’s largest financial organizations.
Each of these bodies has been authorized by Chinese regulatory agencies to oversee all regulations in their respective industry, making their statement more than just a recommendation to members of the industry.
The reasoning behind the ban was the high volatility of the crypto market, as well as the lack of “real support value” and “extremely easily” manipulable prices of digital assets.
China has had a huge influence in crypto markets at times, and many of the biggest crypto exchanges can find their roots in Chinese development teams.
Rising crypto regulations become a global trend
China’s decision to reiterate the cryptocurrency ban for the financial sector is not an isolated incident in the world state, as concerns about the cryptocurrency’s growing popularity have been at the forefront of the attention of several governments.
In February 2021, an official bulletin released by the Indian Parliament suggested the country may consider introducing legislation banning all private cryptocurrencies.
The Indian government’s decision to consider a cryptocurrency ban is the result of its efforts to explore the creation of a central bank digital currency, which would be a digital version of the rupee powered by the common underlying technology. to all cryptos: the blockchain.
Earlier this month, Turkey’s central bank banned the use of crypto for the purchase of goods and services in the country, citing that crypto was “neither subject to any regulatory and supervisory mechanism nor to a central regulatory authority”, and therefore, it causes “irreparable” damage.
The United States also has its eyes on crypto
Newly appointed Acting Currency Controller Michael Hsu ordered a review of all recent actions taken by the agency via a statement released before the Financial Services Commission May 19.
The review would include all crypto-related guidelines released over the past year, with the underlying reasoning being concerns about the initiative’s lack of coordination with stakeholders.
Hsu spoke of OCC’s commitment to ensuring that banks remain safe for customers while allowing innovation to flourish by stating:
âAt OCC, the focus has been on fostering responsible innovation,â Hsu said. âFor example, we created an innovation office, updated the licensing framework for domestic banks and trust companies, and interpreted crypto custody as part of banking business. I have asked the staff to review these actions.
While the OCC has issued guidelines that would allow banks to issue their stablecoins, which was seen as a big win for the crypto market, the stance the Hsu administration will take regarding crypto assets remains to be seen. see.
The regulation of cryptocurrencies poses specific challenges for governments, as cryptos do not exist in the same way as many other forms of technology. As a global network, a ban, even in a large country, has little impact on the functionality of the system as a whole.