The China Internet Finance Association Issues a Major Risk Warning Again After Three Years, Making Its Fourth Market Impactful Announcement in the Past Five Years

BlockBeats News, December 5th. Today, the China Internet Finance Association, in conjunction with multiple departments, released the latest risk reminder on preventing illegal activities related to virtual currencies. This comes three years after the cryptocurrency risk reminder in 2022. Looking back over the past five years, at key moments of market hype, the Internet Finance Association has issued four consecutive important announcements.

On April 13, 2022, the "Initiative to Prevent NFT-Related Financial Risks" was issued, firmly restraining the financialization and securitization trend of NFTs. It explicitly states that virtual currencies such as Bitcoin may not be used as the pricing and settlement tools for NFT issuance transactions and prohibits providing financing support for NFT transactions. The document quickly cooled down the domestic "digital collectibles" market. Leading platforms such as Tencent Fantastar and Alibaba Whale Hunt subsequently tightened their gifting rules, causing many small and medium-sized collectibles platforms to shut down due to liquidity depletion, leading to the bursting of the domestic NFT speculative bubble.

On May 18, 2021, the "Announcement on Preventing the Risk of Speculation in Virtual Currency Trading" was issued, reiterating that virtual currency trading contracts are not protected by law. It required financial institutions and payment institutions to refrain from engaging in virtual currency-related businesses (such as account opening, registration, trading, clearing, and settlement). The day after the announcement was made (May 19, 2021), market panic spread, and Bitcoin's price dropped by more than 30% in a single day, breaking below the $30,000 mark from above $43,000, setting a new record for total liquidation across the entire network.

On April 2, 2020, the "Risk Reminder on Participating in Speculative Trading on Overseas Virtual Currency Exchanges" was issued, pointing out that overseas platforms are not only not protected by Chinese law but also commonly engage in market manipulation such as fictitious trading data and malicious crashes. This document marked an increase in regulatory focus on "offshore" exchanges. Subsequently, crackdowns on the fiat channels for virtual currency over-the-counter (OTC) trading in China significantly intensified, leading to a large-scale occurrence of "card freezes."