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China sends another warning on cryptocurrency risks amid ‘wild fluctuations’
- State-backed financial associations have warned their members to stay clear of any financing activities related to popular cryptocurrencies
- Statement comes amid recent price volatility and as Beijing seeks to draw a distinction with its own sovereign digital currency
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Three Chinese state-backed financial associations have jointly issued a warning about the risks stemming from volatile cryptocurrencies, in the latest step by Chinese authorities to tamp down on speculative trading and draw a clear distinction with the central bank’s own digital currency.
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The National Internet Finance Association of China, a state-backed association of Chinese internet firms providing financial services, the China Banking Association on behalf of the country’s banks, as well as the Payment and Clearing Association of China, on Tuesday warned their members to stay clear of any financing activities related to popular cryptocurrencies.
They stated that any activity related to the exchange of fiat money for cryptocurrencies, providing intermediary services to facilitate trading, or conducting token-based derivatives trading, could be charged as a criminal offence in China. The warning, which was republished by the People’s Bank of China (PBOC), the country’s central bank, underlines Beijing’s caution when it comes to the financial risks and money laundering concerns raised by cryptocurrencies.
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Cryptocurrency price volatility has also been exacerbated recently by comments made by US billionaire and entrepreneur Elon Musk, who bought US$1.5 billion of bitcoin in February before saying purchases of his Tesla cars using bitcoin had been suspended due to concerns over the increasing use of fossil fuels in bitcoin mining.
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