China has banned banks and payment firms from offering cryptocurrency-related services even though the country continues to be a global hub for bitcoin mining.
According to Reuters, three Chinese industry bodies issued a joint statement explaining that banks and online payment platforms cannot offer clients any service involving cryptocurrency, including registration, trading, clearing and settlement.
“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,” the industry bodies said.
The industry bodies are the National Internet Finance Association of China, the China Banking Association, and the Payment and Clearing Association of China.
The country has already instituted a ban on cryptocurrency exchanges and initial coin offerings (ICO) but hasn’t yet stopped individuals from holding cryptocurrencies. Still, the latest development signals a wider crackdown on cryptocurrency in the country that is consistent with Beijing’s hostility to the industry in the past.
In 2017, China shut down its local cryptocurrency exchanges. Two years later, the country’s central bank said it would block access to all domestic and foreign cryptocurrency exchanges and ICO websites.
The great irony is China remains the leading hub for bitcoin mining, thanks to its relatively cheap electricity rates and convenient access to manufacturers of the necessary hardware. According to one estimate, over 75% of the world’s bitcoin mining took place in the country – as of April last year.
The scale of bitcoin mining operations in China is so vast that one study suggested that the country may miss its carbon emissions reduction goals because of it.