PBoC Talks Crypto ‘Hype’ with Banks and Institutions & Prohibits Use of Their Services
They will also increase the investigation and monitoring of customers, including exchanges and OTC dealers and capital transactions, and will take immediate action against those still involved because crypto trading “disrupt normal economic and financial order” and “infringe people's property safety.”
- The central bank of China summoned banks and payment institutions to talk about the speculation issues related to cryptocurrencies.
The People's Bank of China met with the Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Postal Savings Bank of China, Industrial Bank, Alipay, and others and ordered them not to participate in virtual currency-related business activities.
The relevant departments of the People's Bank of China pointed out that virtual currency trading activities disrupt the normal economic and financial order, breed the risks of illegal cross-border transfer of assets, money laundering, and other illegal and criminal activities, and seriously infringe the people's property safety.
All banks and payment institutions are now asked to strictly implement the “Notice on Preventing Bitcoin Risks” and “Announcement on Preventing Token Issuance Financing Risks” and other regulatory requirements.
Banks and institutions are not to provide account opening, registration, and registration for related activities such as trading, clearing, and settlement.
They are to comprehensively investigate and identify virtual currency exchanges and over-the-counter (OTC) dealers’ capital accounts and cut off the payment link for transaction funds.
Furthermore, they must analyze the capital transaction characteristics of virtual currency trading hype activities, increase technical input, and improve abnormal transaction monitoring models.
Amidst this, the price of Huobi Technology’s shares rose, which according to local publication Wu Blockchain, could be due to the central bank’s “relatively mild” action.
Authoritarian state banning its citizens from accessing crypto as much as possible is actually bullish and further highlight the purpose of crypto and DeFi.
If you know, you know.
— Arthur (@Arthur_0x) June 21, 2021
Before PBOC's statement came, the Agricultural Bank of China issued its own on Monday stating that it prohibits the use of its services for virtual currency transactions and related activities. Now, Alipay and others have also issued their related statements.
The decision has been made in accordance with the recent guidance from the relevant departments of the People's Bank of China and the meeting of the Financial Committee of the State Council.
According to the statement, the third-largest bank in China prohibits customers' access involving virtual currency transactions and will increase the investigation and monitoring of customers and capital transactions.
If customers are still involved, the bank will take measures against them immediately, including suspension of account transactions and termination of customer relationships. The translated version of the notice reads,
“In order to protect your legitimate rights and interests and the safety of funds in your account, please actively cooperate with our bank's due diligence work, assist our bank in fulfilling its legal obligations, and crack down on illegal and criminal activities involving virtual currency mining and fund transactions.”
The bank is further urging customers to be on high alert to the risk associated with virtual currency-related business activities and to beware of being deceived.
The ongoing crackdown on mining in China seems to be freaking investors out. While this has a negative impact on BTC’s hashrate near term, in the long run, it is highly positive as it removes the single biggest risk to the network.
— SpartanBlack (@SpartanBlack_1) June 21, 2021
While most banks in China released a similar notice in 2014 to stop customers from trading cryptos, this time is different in three regards. As per Wu Blockchain, the latest notice clearly shows the requirements of the central bank, requiring an investigation of past behavior and reporting that to the government.
On the negative side of things, China doesn’t seem to be done with its crackdown on crypto. On the positive side, “meaningful reversal in global markets just now, with equity futures doing a 180 turnaround and bonds giving back all overnight gains,” said trader and economist Alex Kruger.