The banks promised to stop these types of transactions and improve regulations on Bitcoin. The Chinese government considers that cryptocurrencies are a medium that facilitates criminal activities.
The People’s Bank of China asked various banks to stop processing transactions with cryptocurrencies. Likewise, it asked them to identify those customers who make transactions with Bitcoin or other cryptocurrencies.
Chinese banks and payment institutions are required to implement the “Notice on Preventing Bitcoin Risk” and the “Notice on Preventing Financing Risk of Token Issuance.” These institutions must also identify their customers and “must not open or register accounts linked to digital assets.
According to the People’s Bank of China, financial institutions should thoroughly investigate and identify cryptocurrency exchanges. In addition to that, they must monitor the capital accounts of over-the-counter (OTC) traders and cut the payment link between transaction funds. These entities must analyze the characteristics of the transactions, improve the monitoring models, and ensure better identification of those who trade them.
Chinese Government Agencies Do Not Trust Cryptocurrencies
Later, the People’s Bank of China spoke about the opinion of China’s government agencies on cryptocurrencies. It stated that activities related to this type of assets “alter the normal economic and financial order” of the country. They argue that cryptocurrencies and other digital assets pose risks of illegal international asset transfers, money laundering, and other illegal and criminal activities.
The People’s Bank of China announced a meeting to “fully implement the relevant decisions and deployments of the Party’s Central Committee and the State Council.” They say that they want to combat Bitcoin speculation and other operations with cryptocurrencies, protect the security of people’s property, and maintain financial security and stability.
Several Chinese financial institutions pledged to stop transactions with cryptocurrencies. They include the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Construction Bank, the Postal Savings Bank, the Industrial Bank, and Alipay Network Technology. All of them agreed to collaborate with what the People’s Bank of China requested of them and said that they will make efforts to combat bad practices in this sector.
The Chinese Government Tightens Regulation on Bitcoin Activities
In recent months, the Chinese government has focused on activities related to cryptocurrencies. The State considers that Bitcoin and other cryptocurrencies facilitate the proliferation of illegal operations. For example, more than 1,000 people in China recently went to prison for cryptocurrency money laundering.
However, not only fraudulent operations have attracted the attention of the authorities of the Asian country. Other activities that involve the use of crypto assets, such as mining, have also received tight restrictions. In recent days, the number of provinces where the State banned cryptocurrency mining reached five.
Chinese authorities consider that cryptocurrencies are just vehicles for conducting illegal activities such as money laundering and terrorism financing. For that reason, they have decided to restrict Bitcoin mining activity and to ban financial institutions from processing transactions with cryptocurrencies.
By Alexander Salazar
