The China Internet Finance Association has recently signed a joint statement with China Payment and Clearing Association and China Banking Association, warning the general public about the risks of investing in cryptos.
Three associations outlined four issues that are related to crypto investment, starting with a call for their members to first understand the nature and operation of digital currencies. Based on a report by Shanghai Securities News on May 18, 2021, the trade association under the People’s Bank of China (PBoC) issued a communique titled “Preventing the risk of virtual currency transaction speculation.”
The joint statement is allegedly an extension of past releases from the PBoC about bitcoin and cryptocurrency risks. As a part of the communique, the three associations highlighted four issues that are related to crypto investment, starting with a call for their members to learn and understand the nature of digital currencies.
Based on the release, cryptos are not ‘real currency’ and should never be used as a medium of exchange for goods and services. In July 2020, the Beijing Arbitration Commission issued a ruling that declared bitcoin to be a virtual commodity.
For the second point, the trade associations said that financial institutions and other member organizations should not engage in cryptocurrency-related business transactions. An excerpt of this document mainly addressing internet platforms reads:
“Internet platform corporate member units shall not provide services such as online business premises, commercial displays, marketing promotion, paid diversion, etc. for virtual currency-related business activities. If clues or related problems are found, they shall promptly report to relevant departments and provide technical support for related investigations and assistance.”
These trade associations also warned the retail traders that they need to be wary of the risks involved in cryptocurrency investments while also urging member institutions to abide by the existing regulatory provisions regarding digital currencies.
Back in 2017, the People’s Republic of China banned token issuance and cryptocurrency trading, which forced the major exchanges to move all of their operations out of the country. That action has been followed by several conflicting statements on crypto, with the government appearing to favor the ‘blockchain, not bitcoin’ narrative.