A report released on Reuters on Tuesday claimed that the Chinese government still maintain her stance on the ban placed on payment companies and financial institutions prohibiting them on any form of crypto transactions and also warns investors on crypto, which is tagged speculative.
The middle of May has been quite a rough one for the crypto space, with the price of Bitcoin going on a long journey down after Elon Musk and Tesla dissociated themselves from the leading digital asset in support of a token with a lesser carbon footprint.
As it can be imagined, the news from the Chinese government could not help the price drop on BTC, ETH, and even other mainstream cryptos.
The Wavering Position of China on Crypto
Having ban all ICOs (Initial Coin Offering) and cryptocurrency trading in 2017 and blocking local and international crypto exchanges in 2019, it seemingly appeared that China relaxed its position on cryptocurrency.
But recent news from Reuters revealed that all online payment gateways and banks had been charged to halt any transaction relating to crypto.
Qiao Wand, a crypto analyst, mentioned that the government is only trying to reiterate the anti-speculation law that was put in place before.
A statement from three bodies in the country, namely the China Banking Association, the Payment and Clearing Association of China, and the National Internet Finance Association of China, noted that the volatility recorded recently in the crypto market could be a challenge and threat for the normal financial and economic order. All financial institutions in the country are therefore discouraged from helping clients facilitate crypto trading.
The statement read: “Of recent, the prices of Cryptocurrency have risen tremendously and has fallen drastically, which reawake the speculative trading of cryptocurrencies. This somehow is an infringement on the safety of the properties of our people, hence affecting the normal financial and economic order.”
What is the Implication for Cryptocurrency Holders in China?
The renewed stance of China with crypto and other digital assets is a result of the plunge in the price of BTC recently, but the news caused a further drop in the price. The bodies stated above claim that cryptocurrencies are not pegged on real value; hence their prices can be manipulated easily.
While there is a sustained ban on ICOs and Exchanges, there is no sanction on holding crypto in the country.