China’s latest attempt to curb the emerging digital trading market has caused crypto prices to fall.

China prohibits financial institutions and payment companies from providing services related to cryptocurrency transactions, and warns investors not to engage in speculative crypto transactions.

This is China’s latest attempt to contain the emerging digital trading market. The three industry bodies stated in a joint statement on Tuesday that under the ban, such institutions, including banks and online payment channels, are not allowed to provide customers with any services involving cryptocurrency, such as registration, trading, clearing and settlement.

They said in the statement: “Recently, the price of cryptocurrency has skyrocketed and plummeted, and speculative trading of cryptocurrency has rebounded, which has seriously violated the security of people’s property and disrupted the normal economic and financial order.” These three industry institutions are: China National Internet Financial Association, China Banking Association and China Payment and Clearing Association.

China has banned cryptocurrency exchanges and initial token issuance, but it has not prohibited individuals from holding cryptocurrencies.

The statement also stated that institutions must not provide cryptocurrency savings, trust or mortgage services, nor can they issue cryptocurrency-related financial products.

No digital tokens

After the People’s Bank of China issued a statement reiterating that digital tokens cannot be used as a payment method, Bitcoin and other major cryptocurrencies plummeted.

On Wednesday, Asia’s largest token fell by as much as 7.3% to $40,139, continuing a week-long decline triggered by Tesla founder Elon Musk’s back and forth comments on the company’s tokens. Ether, Dogecoin and Internet computers that caused a sensation last week also retreated.

This is not the first move Beijing has taken against digital currencies. In 2017, China closed its local cryptocurrency exchange, killing the speculative market that accounts for 90% of global Bitcoin trading volume.

In June 2019, the People’s Bank of China issued a statement stating that it would prohibit access to all domestic and foreign cryptocurrency exchanges and initial token issuing websites, aiming to curb all cryptocurrency transactions by banning foreign exchange transactions.

The statement also emphasized the risks of cryptocurrency transactions, stating that virtual currencies are “not supported by actual value”, their prices are easily manipulated, and transaction contracts are not protected by Chinese law.