NIFA, CBA & PCAC’s Joint Announcement on Guarding against Risks related to Virtual Currency Trading and Speculation
Recently, virtual currency prices have witnessed drastic rise and fall, while virtual currency trading and speculation has rebounded. This has seriously infringed on people’s financial interests and disrupted the normal economic and financial order. In order to further implement the requirements of the People’s Bank of China (PBC) and other regulators on preventing risks of virtual currency trading and speculation, such as the “Notice on Preventing Bitcoin Risks” and “Announcement on Guarding against ICO Risks”, the National Internet Finance Association of China (NIFA), China Banking Association (CBA), and Payment and Clearing Association of China (PCAC) jointly call for relevant parties to stay alert.
First, it is important to correctly understand the nature of virtual currency and related business activities.
Virtual currency is a sort of specific virtual commodity. It is not issued by the monetary authority, nor a legal tender or compulsive like fiat currency, therefore should not and cannot be circulated and used as currency in the market.
Second, relevant institutions shall refrain from conducting business related to virtual currency.
Financial institutions, payment institutions and other members should effectively strengthen their social responsibilities. They must not use virtual currency to price products and services. They must not underwrite insurance businesses related to virtual currencies or include virtual currencies in the scope of insurance liability.
Third, consumers should raise risk awareness and beware of potential economic losses.
Virtual currency has no real value, thus its prices are extremely easy to be manipulated. Relevant speculation and trading activities have multiple risks such as false asset, business failure, and investment speculation. From the perspective of current judicial practices of China, virtual currency trading contracts are not protected by law, and the consequences and losses caused by investment and trading are solely borne by investors.
Fourth, self-regulatory management should be enhanced.
All members must strictly implement relevant national regulatory requirements, abide by industry self-regulation commitments, and resolutely refrain from conducting or participating in any business activities related to virtual currencies.
About NIFA: Established on 25 March 2016, the National Internet Finance Association of China (NIFA) is a national self-regulatory organization in the field of Internet Finance and is initiated by the People’s Bank of China in collaboration with relevant ministries and commissions including the CBRC (China Banking Regulatory Commission), the CSRC (China Securities Regulatory Commission), and the CIRC (China Insurance Regulatory Commission).
NIFA aims at regularizing the market behaviors of professional institutions, protecting the legitimate rights and interests of the industry, facilitating professional institutions to contribute to social and economic development more effectively, and guiding compliant and healthy performance of the industry through self-regulatory management and membership service.
About: China Banking Association (CBA)
China Banking Association (CBA) is a nationwide non-profit self-regulation organization of China’s banking sector, set up with the approval of the People’s Bank of China (PBC) and the Ministry of Civil Affairs, and registered at with the Ministry of Civil Affairs in May 2000. Since its founding in 2003, China Banking Regulatory Commission (CBRC), replaced PBC to guide and supervise CBA. In May, 2018, China Banking and Insurance Regulatory Commission (CBIRC) was set up and CBA’s competent authority becomes CBIRC.
CBA serves for the common interest of its members through the functions of self-regulation, rights protection, coordination and service so as to safeguard lawful rights and maintain market order of the banking sector, enhance the overall capability of banking employees and promote the healthy and sustainable development of the industry.
About: Payment and Clearing Association of China (PCAC) – Please consult association website