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News > China

China: Payment Platforms Banned from Providing Crypto Services

  • The price of bitcoin has fallen drastically after tycoon Elon Musk hinted last Sunday that Tesla may have sold or was going to sell its assets in this cryptocurrency.

    The price of bitcoin has fallen drastically after tycoon Elon Musk hinted last Sunday that Tesla may have sold or was going to sell its assets in this cryptocurrency. | Photo: Twitter/@crypto_news24

Published 18 May 2021 (3 hours 28 minutes ago)
Opinion

China has banned financial institutions and payment companies from providing services related to cryptocurrency transactions and warned investors against speculative trading in such currencies.

Under the ban, these institutions - including banks and online payment channels - must not offer customers any services related to cryptocurrencies, such as registration, trading, clearing, and settlement, three industry bodies said in a joint statement on Tuesday.

"Recently, cryptocurrency prices have soared and plummeted, and speculative trading has rebounded, seriously infringing on people's property security and disrupting the normal economic and financial order," the agencies said.

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China has banned cryptocurrency exchanges and initial coin offerings but has not prevented holding by individuals.

Institutions should not provide cryptocurrency savings or trust services, or issue related financial products, the statement added.

The statement also highlighted the risks of cryptocurrency trading, saying that virtual currencies are "not backed by real value," their prices are easily manipulated, and trading contracts are not protected by Chinese law.

The three industry bodies are the China National Internet Finance Association, the China Banking Association, and the China Payments and Clearing Association.

The price of bitcoin has fallen after tycoon Elon Musk hinted last Sunday that Tesla might have sold or was going to sell its assets in this cryptocurrency.

The billionaire advanced the possible move in response to a user's tweet. The author of the initial post wrote that bitcoin holders "will be slapped next quarter" after Tesla divested all holdings of the cryptocurrency, in which it invested $1.5 billion in January. "With the amount of hate Elon Musk is getting, I don't blame him," the user added.

"Indeed," Musk replied, without specifying what he agreed with expressly.

The tycoon's tweet resulted in a sharp fall of the bitcoin, which lost more than 10%. In an instant, it reached $42,279. Sunday's high had been $49,605, according to the Coindesk portal.

About 11 hours after the publication, Musk specified, "To clear up the speculation, Tesla has not sold any bitcoin." The new tweet triggered an instant recovery of the cryptocurrency, which now trades at about $44,760.

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