By Shelly Melancon (Switzerland)
The Chinese government has banned financial institutions in the country from the use of cryptocurrencies in their transactions.
Reports From Wu Blockchain on Twitter stated that three Chinese associations under the jurisdictions of China’s Central Bank issued the document banning Chinese institutions from executing further transactions in cryptocurrency or any sort of digital currency. The document further warns Chinese residents to desist from participating in transactions in virtual assets, stating that the law does not back them. The three institutions that jointly made the decision are: the National Internet Finance Association of China (NIFA), the China Banking Association (CBA) and the Payment and Clearing Association of China.
Chinese institutions including banks and virtual payment service providers are no longer expected to offer their users any service that would incur the use of digital assets. The joint body said in a statement on Tuesday that services such as settlement, registration, trading and clearing should not involve crypto.
“Recently, cryptocurrency prices have skyrocketed and plummeted, speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order”, the joint body stated.
Chinese Institutions Warns About the Volatility of Cryptocurrencies
The statement from the umbrella body further highlighted the highly speculative crypto market. The body has mentioned that the prices of cryptocurrencies are easily manipulated and that cryptocurrencies are not supported by real value nor are they supported by the financial laws of China.
The decision made by the financial body is obligatory and encompasses all financial institutions that offer finance-related services to Chinese residents.
The document has further reiterated that the government would not be able to aid any resident that loses their funds in crypto-related ventures, stating that the responsibilities would be borne by the individual alone since the government does not offer protection from such losses.
The Evolution of China’s Digital Yuan
Previously referred to as DCEP (Digital Currency Electronic Payment) and now known as the digital Yuan, the evolution of a decentralized virtual currency to be issued by its Central Bank for Chinese citizens.
Also called the Digital Renminbi, is the first crypto asset that would be launched by a major economic power in the world. The value is proposed to be equal with other forms of the Chinese Yuan such as bills and coins. The Chinese Central bank said that the novel project would offer both domestic and international transaction usage while mentioning it would be faster and less expensive in comparison with existing systems of financial transactions.
The progress made in the development of cryptocurrency is promising as the country is concluding plans to have the virtual currency tested. A pilot test in Suzhou City was attempted as over 180,000 consumers were handed 55 Yuan in digital wallets to spend in outlets that are participating in the test between the 1st of May and the 5th of June.
Current reports have it that the Chinese government is trailing the digital Yuan across the border to Hong Kong and Shenzhen as it plans to make the proposed digital asset useful internationally.
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