Immediately after Reuters released the news about China banning crypto activity, many started criticizing the news agency for misleading its readers.
Yesterday, Reuters reported that China is banning financial institutions and payment companies from providing crypto-related services. According to the news agency, three Chinese institutional bodies that are in charge of the financial sector have made a joint statement, providing guidance on crypto activity. These organizations are the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China.
According to their statement, financial institutions can not have any business related to cryptocurrencies. They have enlisted activities prohibited:
“Financial and payment member institutions shall not provide insurance services that relate to virtual currencies or directly and indirectly offer crypto-related services for their clients, including but not exclusive to: crypto-related trading, custody, lending and settlement; accepting virtual currencies as a payment tool; exchanging virtual currencies with the Renminbi.”
The decision resulted from cryptocurrencies’ volatile nature. It infringes the security and property of people, thus disrupting the normal financial and economic order:
“Recently, crypto currency 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. Judging from the current judicial practice in my country, virtual currency transaction contracts are not protected by law.”
Notably, the list of activities banned does not mention that individuals can not hold cryptos.
Following the news, the value of the world’s cryptocurrencies plunged by about $50 billion, or 2.5%.
Ban of Cryptos in China: Fake News?
Immediately after Reuters released the news about China banning crypto activity, many started criticizing the news agency for misleading its readers. In particular, Reuters has been accused of writing a fake article about the ban that the Chinese authorities imposed back in 2017. As a matter of fact, that ban already had the same requirement. It also prohibited financial institutions and non-banking payment organizations from offering crypto trading, settlement, or insurance services.
3 dumb things happened within the last hour:
1) Reuters writing a misleading article on China banning
2) People retweeting Reuters and believing it
3) Market dumping on the Reuters news
China didn't just ban crypto. It's reiterating an anti-speculation law from years ago.
— Qiao Wang (@QwQiao) May 18, 2021
Further, in 2019, the People’s Bank of China announced its plan to block access to all domestic and foreign cryptocurrency exchanges and Initial Coin Offering (ICO) websites, in order to stop all cryptocurrency trading with a ban on foreign exchanges. Until now, it is illegal for financial institutions and payment companies to offer their clients services relating to cryptocurrencies, such as registration, trading, clearing, and settlement.
Thus, Reuters’ report is not revealing something new, as it repeats the same restrictions that took place before. Instead, it serves as a reminder for those dealing with cryptos.