The People’s Bank of China (PBoC) released a statement on Monday, saying it recently called a meeting with several domestic banks and mobile payment service providers. They included Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Construction Bank of China (CBC), Postal Savings Bank of China, Industrial Bank, as well as the application of AliPay mobile payment.
The PBoC said speculative activity around crypto trading has severely disrupted the balance of China’s financial system, creating 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.
The PBoC added that banks should check 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 central bank also asked participants to improve their internal monitoring algorithms to better analyze the characteristics of crypto-related transactions.
Shortly after the PBoC’s statement, ICBC, ABC, CBC and AliPay all issued a similar notice, stating that if users were found processing crypto transactions, they would terminate affected customer accounts. and report the problem to the appropriate authorities.
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 reach $ 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. .
As a result, Chinese crypto investors have 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 the Chinese yuan from flowing into the crypto markets.
China’s broader crackdown on crypto
The new PBoC measure comes after last month’s Council of State meeting that mentioned the escalation of the crackdown on bitcoin commercial and mining activities.
Following the high-level comment from the central government, provincial and municipal government agencies in Inner Mongolia, Xinjiang, Qinghai and Sichuan have all given orders to their local state-owned power grids to cut off the power supply to bitcoin mining facilities.
Earlier this month, nearly two gigawatts of the energy capacity that powered bitcoin miners in Xinjiang has been shut down.
Sichuan made a similar move last week by closure of 26 bitcoin mining farms as an initial target and ordering local power plants to expand their inspections.
Bitcoin’s total network hash rate decreased by more than 30% from orders to shut down the two main mining hubs, putting pressure on Chinese miners to end mining or migrate abroad.
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