Full disclosure: China’s statement on Cryptos that has sent Bitcoins crashing

China's financial regulators ban cryptocurrency business |

A joint statement released by 3 Chinese financial industry bodies, on banning financial institutions from dealing in cryptocurrencies, has caused significant declines in the cryptocurrency market. Nairametrics got a copy of the statement for our readers.

The statement goes thus:

Recently, the price of virtual currency has skyrocketed and plummeted, and the speculation activities of virtual currency trading have rebounded, seriously infringing on the safety of people’s property and disturbing the normal order of economy and finance. In order to further implement the requirements of the Notice on Preventing Bitcoin Risks issued by Chinese Min Bank and other departments, and to guard against the risk of speculation in virtual currency transactions, the China Internet Finance Association, the China Banking Association and the China Payment Clearing Association jointly announced the following on the relevant matters:

READ: Why Banks don’t trust Cryptos

Virtual currency is a specific virtual commodity, not issued by the monetary authorities, does not have legal compensation and compulsory monetary attributes, is not the real currency, should not and cannot be used as currency in the market circulation.

To carry out the exchange business between legal and virtual currency, to buy and sell virtual currency as a central counterparty, to provide information intermediary and pricing services for virtual currency transactions, token issuance financing, and virtual currency derivatives trading and other related transactions, in violation of relevant laws and regulations, and suspected of illegal fund-raising, illegal issuance of securities, illegal sale of token coupons and other criminal activities.

READ: CBN, SEC working on a regulatory guideline for cryptocurrency trading

Financial institutions, payment institutions, and other member units should effectively enhance social responsibility, may not use virtual currency for products and services pricing, may not underwrite insurance business related to virtual currency or include virtual currency into the scope of insurance liability, may not directly or indirectly provide customers with other services related to virtual currency, including but not limited to: to provide customers with virtual currency registration, transaction, clearing, settlement and other services; To carry out the storage, custody, mortgage and other business of virtual currency, issue financial products related to virtual currency, and use virtual currency as the investment target of trust, fund, and other investments.

READ: Warning shots from regulators are precipitating the recent crash in cryptocurrencies

Member units such as financial institutions and payment institutions should effectively strengthen the monitoring of virtual currency transaction funds, rely on the industry self-regulatory mechanism, strengthen risk information sharing, improve the level of joint prevention and control of industry risks;
Internet platform enterprise member units shall not provide network business premises, commercial display, marketing publicity, paid diversion and other services for virtual currency-related business activities, and shall promptly report the relevant problems and provide technical support and assistance to the relevant investigation and investigation work.

READ: Nigeria’s cryptocurrency ban: A legal analysis

3. Consumers should improve their awareness of risk prevention, beware of property losses

Virtual currency has no real value support, price is very easy to be manipulated, related speculative trading activities have false asset risk, business failure risk, investment speculation risk, and other multiple risks. From the existing judicial practice in China, virtual currency trading contract is not protected by law, the consequences of investment transactions and the resulting losses by the relevant parties bear.

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The vast number of consumers should enhance risk awareness, establish a correct investment philosophy, do not participate in virtual currency trading speculation activities, beware of personal property and rights and interests damage. We should cherish personal bank accounts and not use them for activities such as recharging and withdrawing virtual currency accounts, purchasing and selling related transaction top-up codes, and transferring related transaction funds to prevent illegal use and disclosure of personal information.

READ: ABCON asks CBN to check the impact of cryptocurrencies on diaspora remittances

4. Strengthen the self-discipline management of member units

Each member unit shall strictly implement the relevant regulatory requirements of the State, abide by the commitment of self-discipline of the industry, and resolutely do not carry out or participate in any business activities related to virtual currency. The three associations will strengthen self-regulatory supervision of member units, and if they find violations of relevant regulatory regulations and industry self-regulation requirements, they will take disciplinary measures such as industry notification, suspension of membership rights and cancellation of membership in accordance with the relevant self-regulatory norms, and report to the financial administrative departments that those suspected of committing illegal crimes shall transfer the relevant clues to the public security organs.

Since the statement, Bitcoin has plummeted 10.45% in the last 24 hours, as at the time of writing the report. The total cryptocurrency market capitalization is now currently below $2 trillion dollars, currently 1.87 trillion, as at the time of writing this report.

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