China's central bank urges financial institutions to crack down on crypto trading

June 21, 2021 10:41 pm

China’s central bank said on Monday it had recently summoned some banks and payment firms, urging them to crack down harder on cryptocurrency trading.

Details: The People’s Bank of China recently held a meeting, ordering institutions to launch thorough checks on clients’ accounts to identify those involved in cryptocurrency transactions, and promptly cut their payment channels.

Bank executives were summoned to a meeting at which they were questioned about their activities and told to “maintain financial stability and security.” Cryptocurrency trading “disrupts normal economic and financial order” and can facilitate money laundering and other crime, said the central bank in a statement. 

Some major state-owned commercial banks, including Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (AgBank), China Construction Bank (CCB), and Bank of China (BOC), along with Alibaba's payment service Alipay, promised to step up monitoring of customers and block the use of their accounts to buy or trade cryptocurrencies.

“Customers are asked to be more aware of risks, safeguard bank accounts, and not to use virtual currency-related transactions,” CCB said on its website.

AgBank said that it would conduct due diligence on clients to root out illegal crypto-related activities and shut down suspicious accounts.

Alipay declared that it would set up a regulator monitoring system targeting key websites and accounts to detect illegal crypto-related transactions, and would blacklist any merchants involved in virtual currency transactions.

Context: The People's Bank of China stated that its recent meeting with financial institutions aimed to fully implement the State Council's crypto ban.

Last month, China’s State Council stated that it would tighten restrictions on Bitcoin trading and mining. Major Bitcoin mining centers including Sichuan, Xinjiang, and Inner Mongolia have issued bans on crypto mining.

Crypto mining is a big business in China, accounting for more than half of global Bitcoin production.