China banned Bitcoin in an effort to curb cryptocurrency mining and speculative trading of the currency, by suggesting that the cryptocurrency has no real value.
In May 2021, China announced its ban of the trading of cryptocurrency. The new ban constitutes the prohibition of financial institutions, including payment companies, from rendering services related to cryptocurrency trading. Moreover, it prohibits investors from trading currency. This is not the first ban implemented by China on cryptocurrency. Even so, this ban follows the first restrictions placed on the trading by China on cryptocurrency.
In 2017, the Chinese Government circulated the first conditions of the cryptocurrency ban. However, in light of the new amendments made to the ban, the 2017 restrictions were lax. This is as the new ban has expanded to services which can be offered, and the state being emphatic that cryptocurrency does not have a “real value.”
The amendment ban of cryptocurrency is considered as a proactive tactic by the Chinese Government to curb the growing digital trade market which is burgeoning in the country. Therefore, the amended ban stipulates that financial institutions, such as banks, cannot offer clients services related to cryptocurrency. These include services such as registering, trading, clearing and settlement of cryptocurrencies. A detail which was not explicit, is whether locals can still have cryptocurrency.
The decision and statement on the ban was shared by three financial bodies in China. These include the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China. Addressing their concerns and reasons for the ban, which took immediate effect, the statement, in part, read, “Recently, cryptocurrency prices have skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, seriously infringing on the safety of people’s property and disrupting the normal economic and financial order.”
Currently, the country is slowly closing down its supply of electricity for cryptocurrency mining sites. The latest of the electricity supply plants that have been shut down include Inner Mongolia and Qinghai.