China has banned financial institutions and payments companies from offering Bitcoin services to clients, including registration, trading, clearing and settlement, Reuters reported.
The ban, which also applies to other cryptocurrencies, was announced in a joint statement from the National Internet Association of China, the China Banking Association and the Payment and Clearing Association of China that pointed to concerns over volatility and speculation.
“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,” the joint statement said
According to the report, the statement claimed that “virtual currencies ‘are not supported by real value,’ their prices are easily manipulated, and trading contracts are not protected by Chinese law.”
Under the ban, institutions are prohibited from issuing financial products related to and providing savings, trust or pledging services of cryptocurrencies in China. But the country has not made it illegal for individuals to hold bitcoin or other cryptocurrencies.
Similar bans or regulatory notices have taken place earlier this year, particularly in Nigeria and Turkey, and the two countries have seen different outcomes.
Instead of diminished trading activity, Nigeria saw a 27% increase in peer-to-peer trading after regulated financial institutions were issued a ban reminder on providing Bitcoin services. While in Turkey, the central bank is reportedly planning to serve as a custodian for local cryptocurrency exchanges following the collapse of not one but two local exchanges and an earlier ban on all cryptocurrency payment services.