China’s central bank recently ordered banks, including four state-owned commercial banks, and leading mobile payments provider Alipay to cut off all transactions linked to bitcoin, stepping up its clamp down on cryptocurrencies in the country.
The Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China, China Construction Bank and the Postal Savings Bank of China were among financial companies that attended a regulatory discussion organised by the People’s Bank of China (PBOC) recently. Other participants included the Fujian-based Industrial Bank, and Alipay (China), a subsidiary of Ant Group, which along with Tencent Holdings’ WeChat Pay controls more than 90 per cent of China’s mobile payments market.
“Virtual currency transactions and speculative activity have disrupted the normal order of the economy and financial [system]. They increase the risks of illegal cross-border transfers of assets and illegal activities such as money laundering,” the PBOC said in a statement posted on its website on Monday.
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The central bank’s latest warning reiterates its stance against bitcoin and other cryptocurrencies, and follows a warning issued last month by trade associations such as the China Banking Association and the Payment and Clearing Association of China. These trade bodies have warned their members against dealing with cryptocurrency-related transactions.
More recently, the National Development and Reform Commission’s branch in Sichuan province ordered a clean-up and termination of all cryptocurrency mining activity. Sichuan is popular among cryptocurrency miners because of its abundant and cheap hydropower supply.
Chinese banks have been banned from dealing in bitcoin since late 2013, when the cryptocurrency was worth less than US$1,000 a unit, a fraction of its current value. Bitcoin rose more than 120 per cent this year to a historical peak of US$64,860 in April before dropping in value.
The PBOC said on Monday that all banks and internet payment operators should refrain from providing account opening, registration, trading, settlement and clearing services to cryptocurrency-related activities. “Every organisation should comprehensively identify fund accounts linked to cryptocurrency exchanges and over-the-counter dealers, and cut off [their respective] payment avenues immediately,” it said.
Bitcoin, which has been on a downwards trend over the last three months, fell further after the PBOC warning. On Monday, the cryptocurrency was being quoted at US$32,600, down 8.4 per cent from Sunday.
ICBC said on Monday that it would continue monitoring transactions for links to cryptocurrencies or fundraising activity through tokens. “Once discovered, we retain the right to terminate the transactions … and report the [transactions] to the relevant authority,” the bank said in a short statement posted on a Chinese data website.
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