Please ensure Javascript is enabled for purposes of website accessibility

China Bars Financial Companies From Cryptocurrency Services

By Eric Volkman - May 19, 2021 at 8:57AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This isn't the country's first crackdown on Bitcoin and its ilk.

In a fresh crackdown on cryptocurrencies, China has banned financial services providers from certain offerings related to the popular but volatile asset class.

In a joint statement issued on Tuesday, the country's Banking Association, the National Internet Finance Association, and the Payment and Clearing Association prohibited such companies from providing a raft of crypto-related services. These include trading in such assets, custody, clearing and settlement, and registration.

Bitcoin symbol made up of colored spheres.

Image source: Getty Images.

The three agencies justified this by writing in their statement that "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."

This move wasn't expected, but it has precedent. In 2017, the country banned cryptocurrency exchanges from operating; at the time, Chinese exchanges were responsible for the vast bulk of Bitcoin (BTC -0.40%) trading.

That year, the government also declared a halt to initial coin offerings (ICOs) in the country. Similarly to this latest ruling, several government financial agencies issued a joint statement on that ban, saying that it was intended to protect investors and mitigate risk.

In 2019, the People's Bank of China went a step further, saying it was blocking the access of domestic investors to cryptocurrency exchanges and ICO sites abroad.

China's latest move against cryptocurrencies is the second of two big shocks within the past week. Last Wednesday, mercurial Tesla Motors (TSLA -1.17%) CEO Elon Musk surprisingly announced that his company would stop taking Bitcoin as payment for Tesla vehicles.

Formerly seen as an enthusiastic proponent of Bitcoin in particular and cryptocurrencies in general, the Tesla boss' about-face shook confidence in both.

Battered again on Tuesday, all major cryptos fell significantly. Bitcoin, for example, ended the day more than 9% lower.


Eric Volkman has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool owns shares of and recommends Bitcoin and Tesla. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Bitcoin Stock Quote
$23,924.86 (-0.40%) $-96.35
Tesla, Inc. Stock Quote
Tesla, Inc.
$917.12 (-1.17%) $-10.84

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.