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In its latest push to crack down on crypto trading activity, China’s central bank has asked domestic banks to cut funding channels for over-the-counter (OTC) crypto traders.
The People’s Bank of China released a statement on Monday, saying it recently called a meeting with several domestic banks and mobile payment service providers. This included the Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank of China, Postal Savings Bank of China, Industrial Bank, as well as the AliPay mobile payment app.
The PBoC said speculative activity around crypto trading has severely disrupted China’s financial order and created the risk of illegal capital outflow across the border and money laundering. He reiterated his position from 2017 that no financial institution should provide banking and settlement services for crypto-related transactions.
He added that banks should make sure to verify whether OTC traders are using their services to provide entry and exit ramps to Chinese traders in a peer-to-peer fashion. “Institutions should immediately cut off their payment and funding channels,” the central bank said.
The Agricultural Bank of China released an announcement earlier on Monday that reiterated the same position it has imposed since 2017. The only difference was that it indicated that the bank would terminate accounts receivable if users were found processing accounts. crypto transactions and would report the problem. to the competent authorities. But the bank withdrew the ad shortly after.
The price of Bitcoin fell below $ 34,000 shortly after the ABC released the now-deleted ad. Following the official statement from the PBoC, the price of bitcoin has fallen further to $ 32,000, but has rebounded above $ 33,000 at the time of writing.
Since the PBoC banned initial coin offerings (ICOs) in 2017 and cut fiat ramp channels for crypto exchanges, many larger exchanges have largely shifted to crypto-to-crypto-only order books. .
Chinese crypto investors have therefore relied on OTC traders to switch from fiat to crypto in a peer-to-peer fashion. For example, User A would send crypto assets to User B after User B transfers an equivalent amount in Chinese Yuan through mobile payment apps or bank transfer.
It looks like the latest move would likely target such funding methods to prevent fiat money from flowing into the crypto markets.
China’s broader crackdown on crypto
The new PBoC measure comes after last month’s State Council meeting that mentioned the intensified crackdown on bitcoin trading and mining activities.
Following high-level comments from the central government, provincial and municipal government agencies in Inner Mongolia, Xinjiang, Qinghai and Sichuan have all ordered their local state-owned power grids to cut off the electricity supply. bitcoin mining facilities.
Earlier this month, nearly two gigawatts of power capacity that powered bitcoin miners in Xinjiang was shut down.
Sichuan made a similar move last week by shutting down 26 bitcoin mining farms as an initial target and ordered local power plants to expand their inspections.
The Bitcoin network’s total hash rate has declined by more than 30% since orders to shut down the two major mining hubs, forcing pressure on Chinese miners to end mining or migrate overseas.
2021 The Block Crypto, Inc. All rights reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial or other advice.
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