BEIJING, CHINA — China banned cryptocurrencies on Tuesday, 19 May.
The ban forbids any financial institutions and payment companies from doing business related to cryptocurrencies.
Markets responded negatively, and the move led to a plunge in cryptocurrency prices worldwide.
Funny enough, the ban comes as China is testing out its own digital currency, called the DCEP, or "digital yuan".
Here are the details: The South China Morning Post reports that China's sovereign digital currency, called the DCEP or Digital Currency Electronic Payment, is already undergoing trials.
This so-called "digital yuan" is managed privately by the People's Bank Of China under a centralised system, which is the complete opposite of most forms of cryptocurrencies — which are designed to disperse power away from the government.
Unlike cryptocurrencies, all transactions with the digital yuan would be completely traceable by the Chinese government.
The database can be checked in real time and can be used to keep digital records and checks against citizens who have committed money laundering, tax evasions or similar offences.
The DCEP will be used to simulate everyday banking activities; including payments, deposits and withdrawals from a digital wallet.
Online payment services like Alipay and WeChat Pay are already popular payment methods in China, with mobile transactions accounting for four of every five payments in 2019.
China has made it clear so far that cryptocurrencies in their current form are unwelcome in the country.
It warns its citizens against the wild speculation of cryptocurrencies, while pushing for a fully centralized digital currency that could give it unprecedented powers.