China’s central bank stated Monday that it summoned several banks and payment companies, including Alipay and China Construction Bank, to urge them to clamp down on cryptocurrency trading.
After China’s State Council (or cabinet) last month stated that it would tighten restrictions for bitcoin mining and trading, the People’s Bank of China met. Beijing has intensified its campaign over the past few weeks.
The PBOC urged institutions to conduct thorough checks of clients’ accounts in order to identify cryptocurrency-related transactions and to promptly reduce their payment channels. The meeting date was not mentioned.
The PBOC stated in a statement that “speculative trading with virtual currencies roils the economic and financial system, spawns criminal activities like illegal asset transfers, money laundering and and endangers people’s wealth.”
Other participants at the PBOC meeting were state-owned lenders Industrial and Commercial Bank of China, Agricultural Bank of China and Postal Savings Bank of China.
The bull run in Bitcoin had rekindled speculative trading globally. People buy cryptocurrencies using yuan through bank accounts or payment platforms.
Three industry associations banned crypto-related financial services last month. However, the bodies are less powerful than the PBOC.
According to the PBOC, its meeting with financial institutions at its most recent meeting was aimed towards fully implementing State Council’s crypto ban.
Bitcoin plunged nearly 10% Monday. Market players blamed jitters over China’s growing crackdown on bitcoin mining and thin liquidity for the losses. Last week, it was down 8.3%. This is the largest daily drop in a single month.
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According to a statement by the PBOC, banks and payment companies were asked to invest more in technology that can better identify and understand crypto-related transactions.
AgBank, ICBC and CCB notified the central bank. Alipay vowed that they would do what was asked.
AgBank stated that it will conduct due diligence on its clients in order to identify illegal crypto-related activities, and close down suspicious accounts.
Alipay, the payment platform used by Ant Group, stated in a separate statement it would establish a regulator monitoring system to target key websites and accounts to detect illicit crypto-related transactions.
Alipay also stated that it would blacklist merchants who engage in virtual currency transactions.
Alipay and Tencent’s Wechat Pay were listed as payment options on some websites of over-the-counter marketplaces, where Chinese people buy cryptocurrencies using the Chinese Yuan.
China’s largest lender, ICBC, warned the public about the dangers of cryptocurrency trading and initial coin offering (ICOs) in a statement.
China has intensified its anti-cryptocurrencies campaign in recent weeks. Recently, bans on cryptomining were issued in several major bitcoin mining hubs like Sichuan and Xinjiang.
China is home to more than half of the world’s bitcoin production. Cryptomining is a huge business.
China also blocked several cryptocurrency-related social media accounts and prohibited the search for major cryptocurrency trading platforms such as Binance or Huobi via baidu.com, Weibo and Twitter-like platform Weibo.