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No, China Didn’t Just Ban Crypto (Again): Here’s What Really Happened

Linas Kmieliauskas
Last updated: | 3 min read

Reports that China has enacted a fresh crypto ban appear to be somewhat wide of the mark, despite a joint statement from three leading financial bodies underlining the fact that companies in the nation are barred from offering crypto-related services to their clients. (Updated at 16:37 UTC: updates throughout the entire text.)

Source: Adobe/Mariia Korneeva

In a joint statement from the National Internet Finance Association of China, the China Banking Association and the Payment and Clearing Association of China, published by Shanghai Securities News and the state-run news agency Xinhua, the institutions appeared keen to remind firms that they must not provide crypto saving, trust or pledging services or issue financial products related to cryptoassets.

The statement added that it was illegal for financial institutions and payment companies to offer their clients services relating to cryptocurrency, such as registration, trading, clearing, and settlement.

The statement was also published on state-run media outlet CCTV channels and on the official WeChat page of the central People’s Bank of China (PBoC).

But the headline writers of most of the Chinese media outlets mentioned above noted that the statements were made in a bid to “prevent the risk of cryptocurrency trading speculation,” dampen “hype.” The central bank used very similar wording to preface its own post.

Reuters, however, also reported on the issue, but appeared to have understood that a fresh ban had been put in place. This does not appear to be the case at all, as many China watchers and Chinese-speaking crypto enthusiasts were keen to point out.

One claimed that the statement only reiterates “an anti-speculation law from years ago.”

Commenters reacted angrily, accusing Reuters of spreading “FUD.”

And while the PBoC did publish the statement, another pointed out that the statement was not the central bank’s own handiwork.

In either case, bitcoin (BTC), ethereum (ETH), and multiple altcoins corrected following the news. BTC dropped from above USD 45,500 to below USD 43,000 before rebounding. ETH dived from almost USD 3,550 to USD 3,291.

At 16:32 UTC, BTC trades at USD 43,114 and is down by almost 1% in a day, while ETH trades at USD 3,359 and is up by more than 1%.

The three bodies issued a warning about the “speculative” nature of crypto trading, claiming that it has the potential to “seriously infringing” on the security of investors’ assets – and that it had the potential to disrupt “the existing economic and financial order.”

Using rhetoric common among regulatory financial bodies the world over, the bodies warned that crypto is “not issued by a monetary authority and “should not be used as currency” in China.

Rather than imposing any new regulations, the bodies underlined that “Chinese judicial practice” stated that “crypto transactions are not protected by law,” meaning that investors are solely responsible for any crypto losses incurred in investments.

They also reminded firms that crypto “exchange services with the fiat yuan and foreign currencies” remain illegal in China.

In September 2017, Beijing exacted a sweeping crypto crackdown, forcing crypto exchanges to close and outlawing initial coin offerings (ICOs). The nation has not barred individuals from holding cryptoassets, however, and over-the-counter (OTC) trade is still going strong – as is the mining industry, which is seeing new participants from a range of different sectors join.

Learn more:
Elongate: Market Rereads Bitcoin FUD Playbook & Waits For The Next Tweet
Chinese Arbitration Body Says Crypto Crackdown ‘Isn’t a Bitcoin Ban’
Chinese Regulators Warn Crypto Crackdown Is Still Effective