6 ms·

China bans financial, payment institutions from cryptocurrency business

69 points by velmu 5y ago

yftsui 5y ago
Chinese Yuan is not a freely convertible currency, each Chinese individual can convert their CNY to a foreign currency up to 50k USD value, the conversion process is tightly reviewed. If banks start offering crypto, they are essentially offering CNY -> Crypto -> USD, the regulation is being circumvented hence they are not happy.
- deleted 5y ago
  [deleted]
- MomoXenosaga 5y ago
  "the conversion process is tightly reviewed" In my country the government is very, very interested in where your money comes from. Please show me your receipts going back 5 years... I do find it amusing crypto is so very often associated with tax evasion and criminal activity.
rblion 5y ago
Their reasoning here is pretty sound if you ask me. I wonder if the 'free world' follows suit or lets it all play out. I can see a few people getting very wealthy and most people making just a little bit or losing money. That's not much different from 'business-as-usual'.
LeCow 5y ago
Institutions should be allowed to fail, loose money and go bankrupt because of their bad decisions. Like everyone else in society.
- chewz 5y ago
  > Institutions should be allowed to fail, loose money They still can under this new law. They were just forbidden from providing cryptocurrency services to retail customers.
- croes 5y ago
  Institutions don't loose money, people do and most of the time not the managers but the customers.
  - makomk 5y ago
    Cryptocurrencies seem like the least of the problems with Chinese financial institutions selling unsuitable investments to retail customers though. Sure, they might lose everything they put in, but at least it stops there. The Bank of China managed to sell aggressively (and deceptively) branded and marketed oil-futures-based investments to ordinary retail customers who ended up losing more than their total investments. (Though they may have eventually given up on trying to claim back the extra from investors.)
  - oldgradstudent 5y ago
    This is crazy talk. Are you too young to have been here during the 2008 crisis? Almost the entire financial system was illiquid and insolvent, and would have collapsed without massive and unprecedented government intervention. And in all cases, management knew, or should have known they were lending money that would never be returned. For example, the reason "liar loans" were called that, was because the financial institution issuing the loans refused to check reported income even if the information was available. The name "liar loans" was common in the financial industry BEFORE the crash.
    - setum 5y ago
      > would have collapsed without massive and unprecedented government intervention would have, could have, but didn’t, that goes only to prove op’s point that institutions don’t lose money, especially the big ones.
      - MomoXenosaga 5y ago
        The government is an institution and they lost money. Entire banks were nationalised in a single night.
- ericyan 5y ago
  https://en.wikipedia.org/wiki/Too_big_to_fail https://en.wikipedia.org/wiki/Too_big_to_fail
- Barrin92 5y ago
  The lesson China took from 2008, when they successfully avoided a financial recession and ensuing political chaos that was widely visible across the West was to start a campaign to clean up the financial sector. China is acutely aware of the risk that unregulated private finance poses to the security of the state but also the economy, and this is why they're hyper-vigilant when it comes to financial products, and I don't blame them to be honest. There is virtually no social upside to people YOLOing their live-savings into crypto. "Well people should be allowed to do stupid stuff" has never had much pull in China. It's not the US.
- canadianfella 5y ago
  Lose
- AnimalMuppet 5y ago
  I kind of like the way it was done in several instances in 2008. The shareholders are wiped out, the management is gone, but the institution was protected (and therefore the depositors were).
JohnJamesRambo 5y ago
Like clockwork, the same old China fud is loaded. What’s amazing is that it continues having an effect the hundredth time.
- young_unixer 5y ago
  The effect of these non-news on the price has become a self-fullfiling prophecy. People sell not because of the effect the change is going to have, but because they think people are gonna think the change is going to have an impact. Everyone thinks everyone else is gonna think that. Boom, dump. Smart people get a golden opportunity to buy cheap while dumb people panic sell.
  - tluyben2 5y ago
    > Smart people get a golden opportunity to buy cheap while dumb people panic sell. Except it's so volatile that you don't know when it's cheap. It's not cheap now; it's some 40-50% above cheap, so let's see how many 'smart' people there really are. I'll wait a bit for actual cheap ETH.
    - inter_netuser 5y ago
      it's here now: https://cheapeth.org/ https://cheapeth.org/
    - young_unixer 5y ago
      > Except it's so volatile that you don't know when it's cheap. You do know. You just have to look at the logarithmic regression bands and fair value models. Granted, these are useless if you intend to day trade, because prices are absolutely unpredictable on the short term, but they're useful if you want to hold for more than 5 months, because prices in the mid and long term are more predictable than you'd think. The current price is not really 'cheap' from a technical perspective, but its cheap if you consider that the market cycle isn't over yet, so in the next 7 months the probability that bitcoin is going above 70k is so big that it's more or less a safe bet at this point. The only thing that could stop Bitcoin from getting over 70k between today and January 1st 2022 is a global economic crisis of the magnitude of the 2008 crisis. IMO, buying today and holding for 7 months is the best think you could do right now. (I'm talking about Bitcoin, because yes, ETH isn't cheap right now. No one knows if the ETH/BTC valuation is going to hold as it is right now, I wouldn't buy ETH today)
anandaverma18 5y ago
This is a mis-informed article. China banned crypto like 100th time.
wolfretcrap 5y ago
I thought china was rich enough and had huge internal demand for its produced goods. But it's banning cryptocurrency to save its economy? Doesn't seem like their economy is robust enough now.

69 points by velmu 5y ago

Chinese Yuan is not a freely convertible currency, each Chinese individual can convert their CNY to a foreign currency up to 50k USD value, the conversion process is tightly reviewed. If banks start offering crypto, they are essentially offering CNY -> Crypto -> USD, the regulation is being circumvented hence they are not happy.

deleted 5y ago
[deleted]
MomoXenosaga 5y ago
"the conversion process is tightly reviewed" In my country the government is very, very interested in where your money comes from. Please show me your receipts going back 5 years... I do find it amusing crypto is so very often associated with tax evasion and criminal activity.

rblion 5y ago

Their reasoning here is pretty sound if you ask me. I wonder if the 'free world' follows suit or lets it all play out. I can see a few people getting very wealthy and most people making just a little bit or losing money. That's not much different from 'business-as-usual'.

LeCow 5y ago

Institutions should be allowed to fail, loose money and go bankrupt because of their bad decisions. Like everyone else in society.

chewz 5y ago
> Institutions should be allowed to fail, loose money They still can under this new law. They were just forbidden from providing cryptocurrency services to retail customers.
croes 5y ago
Institutions don't loose money, people do and most of the time not the managers but the customers.
- makomk 5y ago
  Cryptocurrencies seem like the least of the problems with Chinese financial institutions selling unsuitable investments to retail customers though. Sure, they might lose everything they put in, but at least it stops there. The Bank of China managed to sell aggressively (and deceptively) branded and marketed oil-futures-based investments to ordinary retail customers who ended up losing more than their total investments. (Though they may have eventually given up on trying to claim back the extra from investors.)
- oldgradstudent 5y ago
  This is crazy talk. Are you too young to have been here during the 2008 crisis? Almost the entire financial system was illiquid and insolvent, and would have collapsed without massive and unprecedented government intervention. And in all cases, management knew, or should have known they were lending money that would never be returned. For example, the reason "liar loans" were called that, was because the financial institution issuing the loans refused to check reported income even if the information was available. The name "liar loans" was common in the financial industry BEFORE the crash.
  - setum 5y ago
    > would have collapsed without massive and unprecedented government intervention would have, could have, but didn’t, that goes only to prove op’s point that institutions don’t lose money, especially the big ones.
    - MomoXenosaga 5y ago
      The government is an institution and they lost money. Entire banks were nationalised in a single night.
ericyan 5y ago
https://en.wikipedia.org/wiki/Too_big_to_fail https://en.wikipedia.org/wiki/Too_big_to_fail
Barrin92 5y ago
The lesson China took from 2008, when they successfully avoided a financial recession and ensuing political chaos that was widely visible across the West was to start a campaign to clean up the financial sector. China is acutely aware of the risk that unregulated private finance poses to the security of the state but also the economy, and this is why they're hyper-vigilant when it comes to financial products, and I don't blame them to be honest. There is virtually no social upside to people YOLOing their live-savings into crypto. "Well people should be allowed to do stupid stuff" has never had much pull in China. It's not the US.
canadianfella 5y ago
Lose
AnimalMuppet 5y ago
I kind of like the way it was done in several instances in 2008. The shareholders are wiped out, the management is gone, but the institution was protected (and therefore the depositors were).

JohnJamesRambo 5y ago

Like clockwork, the same old China fud is loaded. What’s amazing is that it continues having an effect the hundredth time.

young_unixer 5y ago
The effect of these non-news on the price has become a self-fullfiling prophecy. People sell not because of the effect the change is going to have, but because they think people are gonna think the change is going to have an impact. Everyone thinks everyone else is gonna think that. Boom, dump. Smart people get a golden opportunity to buy cheap while dumb people panic sell.
- tluyben2 5y ago
  > Smart people get a golden opportunity to buy cheap while dumb people panic sell. Except it's so volatile that you don't know when it's cheap. It's not cheap now; it's some 40-50% above cheap, so let's see how many 'smart' people there really are. I'll wait a bit for actual cheap ETH.
  - inter_netuser 5y ago
    it's here now: https://cheapeth.org/ https://cheapeth.org/
  - young_unixer 5y ago
    > Except it's so volatile that you don't know when it's cheap. You do know. You just have to look at the logarithmic regression bands and fair value models. Granted, these are useless if you intend to day trade, because prices are absolutely unpredictable on the short term, but they're useful if you want to hold for more than 5 months, because prices in the mid and long term are more predictable than you'd think. The current price is not really 'cheap' from a technical perspective, but its cheap if you consider that the market cycle isn't over yet, so in the next 7 months the probability that bitcoin is going above 70k is so big that it's more or less a safe bet at this point. The only thing that could stop Bitcoin from getting over 70k between today and January 1st 2022 is a global economic crisis of the magnitude of the 2008 crisis. IMO, buying today and holding for 7 months is the best think you could do right now. (I'm talking about Bitcoin, because yes, ETH isn't cheap right now. No one knows if the ETH/BTC valuation is going to hold as it is right now, I wouldn't buy ETH today)

anandaverma18 5y ago

This is a mis-informed article. China banned crypto like 100th time.

wolfretcrap 5y ago

I thought china was rich enough and had huge internal demand for its produced goods. But it's banning cryptocurrency to save its economy? Doesn't seem like their economy is robust enough now.