China banned the use of bitcoin as payment
There is no ban on cryptocurrency, but Beijing is imposing new restrictions on services related to digital assets.
Bitcoin reacted by declining to the People’s Bank of China’s announcement that the regulator is ruling out the use of digital assets, including bitcoin, as a means of payment. Curiously, the Celestial Central Bank continues to ramp up testing of its own digital currency, the DC/EP digital yuan.
Thus, the People’s Bank of China statement may indirectly indicate that the regulator is almost ready for a large-scale launch of DC/EP and is clarifying the positions and functions of other digital assets that are already circulating in the global financial market.
In addition, China’s three financial regulators, which determine the rules of the game for online transactions, payment services, and clearing, announced that financial companies in the Middle Kingdom are prohibited from providing services that have to do with cryptocurrencies. The three regulators, who signed the respective joint statement, pointed out that, according to the decision of the Beijing Supreme Arbitration Court, cryptoassets should be considered not as “cryptocurrencies” but as “virtual goods.
Financial institutions in China are instructed not to provide cryptocurrency storage services or issue financial products based on digital assets. Recall that cryptocurrency exchanges and initial public offerings of digital assets (ICOs) are banned in China, but there is mining of cryptocurrencies, including bitcoin.
The latest news from China certainly does not mean a ban on cryptocurrencies themselves, as analyst Qiao Wang points out. Meanwhile, a ban has been postulated for Chinese financial companies to provide services related to cryptocurrencies. In addition, the People’s Bank of China has put a stop to the topic of the potential use of digital assets as a means of payment, while removing the digital yuan from such a discussion.
The new clarification in cryptocurrency regulation in China brought bitcoin to the price level of February this year, in the neighborhood of $42,000, but at the beginning of May 19, the cryptocurrency No. 1 slightly lifted, starting the day at $43,29,000. The decline in bitcoin’s price has made the cryptocurrency market as a whole cheaper, but the total capitalization of digital assets has not declined much, being at the level of $2.05 trillion. Interest in altcoins continues to remain high, resulting in bitcoin’s dominance rate falling to another low of 39.4%.