China's central bank renews warning about cryptocurrency risks
Published: Jul 06, 2021 10:43 PM
Bitcoin, a type of cryptocurrency Illustration: VCG

Bitcoin, a type of cryptocurrency Illustration: VCG

China's central bank, the People's Bank of China (PBC), issued a statement on Tuesday warning against risks associated with cryptocurrencies as China steps up its crackdown, prohibiting financial institutions from offering cryptocurrency-related services.

According to the statement, financial and payment institutions are banned from providing operating venues or commercial promotions to cryptocurrencies. Direct and indirect services related to cryptocurrencies are also prohibited.

Beijing Qudao Xingye Technology Co, which had provided software services for trade in cryptocurrencies, has been shut down by the authorities, according to the Tuesday statement.

The company has been deregistered, and its website has been taken down. 

The PBC also warned investors not to speculate in cryptocurrencies, and advised them to raise their awareness of the risks involved.

"Investors should protect their personal bank accounts, and not use them to top up, purchase or withdraw cryptocurrencies," read the statement. "They should also not be used for transactions of any trade code for cryptocurrencies."

The warning comes as an important step in the national crackdown against the industry, especially in its trading practices and investor acquisition, analysts said.

"It shows that efforts to curb the cryptocurrency industry in China will be long-term and consistent," an industry analyst surnamed Wang said. "It will greatly dampen any hope that the recent measures taken against the industry are only temporary."

Chinese regulators have been intensifying their scrutiny of the cryptocurrency industry, both in terms of mining and trading.

North China's Inner Mongolia Autonomous Region, a major hub for Bitcoin mining, issued the harshest crackdown measures on mining in May, stating that licenses of telecom and internet companies involved in cryptocurrency mining activities would be revoked, while the regional development and reform commission announced eight draft measures against mining activities in the region. 

Some other popular mining sites in China, including Southwest China's Sichuan and Yunnan provinces, introduced similar measures.

The crackdown has led many industry participants to sell their mining machines at a discount or to move their facilities overseas. 

An industry insider told the Global Times that her company was planning to gradually open mines in Kazakhstan, Russia, North America and North Europe, but many other firms in China are not able to relocate.