China orders banks to step up anti-crypto campaign

China’s central bank has warned several of its largest state-owned banks and Jack Ma’s Alipay to “investigate and identify” bank accounts facilitating cryptocurrency trading and to block all related transactions, in the latest Beijing’s move against Bitcoin.

The central bank said on Monday it had appealed to the Agricultural Bank of China, China Construction Bank and ICBC, as well as other payment platforms like Alipay, to discuss the issue of “providing services for speculation on cryptocurrency transactions “.

The regulator called on financial groups to identify and block all transfers to accounts held by cryptocurrency exchanges and other offshore intermediaries, as well as invest in technology to flush out any transactions related to “speculation in cryptocurrency ”.

The order is part of a recent Chinese government crackdown on cryptocurrencies that began in May, as Beijing seeks to end the trade and shut down the world’s largest cryptocurrency mining operations, which lie within its borders. Instead, the central bank wants citizens to use its own digital currency, which it has started testing in large-scale pilot projects.

While Chinese authorities took the first steps to ban banks from processing Bitcoin transactions as early as 2013 and have launched several crackdowns since, they have not been able to completely eradicate cryptocurrency trading. Industry insiders have said that one way for the Chinese to remain able to get their hands on Bitcoin is through peer-to-peer traders.

Leo Weese, co-founder of the Hong Kong Bitcoin Association, said to implement the directive, authorities and banks could slowly begin to trace and cut bank accounts that peer-to-peer traders use to accept. payments.

“Bitcoin trading in China will continue, but will become less liquid and spreads will increase,” Weese said. “People will limit themselves to chatting with their friends and the friends of trusted friends. ”

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The People’s Bank of China said trading in cryptocurrency disrupts the financial system, poses the risk of illegal cross-border asset transfers and money laundering, and “seriously undermines the security of people’s financial assets.” .

Under its strict capital control regime, China severely limits the ability of citizens to transfer money out of the country and has watched Bitcoin cautiously since the cryptocurrency’s rise in popularity almost a decade ago. ‘a decade.

Starting last month, China stepped up efforts to end energy-hungry Bitcoin mining in the country, where around 75% of global mining activity has taken place, according to pre-launch estimates. repression.

Sichuan, a hydropower-rich province in southwestern China, was the last province to order a halt to 26 of its largest local mines last week. It followed bans imposed by local governments at major cryptocurrency mining sites in Xinjiang, Yunnan and Qinghai.

The northern region of Inner Mongolia itself set up a hotline for residents to report neighbors they suspect are cryptocurrency miners.

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