China Says Banks Must Block Crypto Transactions; Market Falls

The People’s Bank of China (PBOC) on Monday told the country’s major financial institutions to stop facilitating virtual-currency transactions, increasing the negative sentiment in crypto markets.

  • Banks must not provide products or services such as trading, clearing and settlement for crypto transactions, the PBOC said in a statement.
  • They also have to make sure to identify virtual-currency exchanges’ and over-the-counter dealers’ capital accounts, and cut off the payment link for transaction funds in a timely manner, it said.
  • Cryptocurrencies fell, with bitcoin trading near $32,000 and ether dropping below $2,000 for the first time since May 23.
  • While the PBOC’s anti-crypto bias is not new, the latest statement comes after consultation with the Industrial and Commercial Bank of China, Agricultural Bank of China, Construction Bank, Postal Savings Bank, Industrial Bank and Alipay (China) Network Technology on the issue.
  • The central bank noted the hype surrounding virtual-currency transactions, and identified them as a risk for illegal cross-border transactions and money laundering and a challenge to economic and financial order.
  • Financial institutions and banks have agreed to take necessary steps in line with the PBOC’s guidelines, it said.
  • The Postal Savings Bank issued a statement saying it will take steps to prohibit virtual currency-related business activities.
  • According to journalist Colin Wu, payments platform Alipay and the Agricultural Bank of China also issued similar statements.
  • The PBOC’s diktat comes after the government’s crackdown on crypto mining activities in the Sichuan province, the world’s largest hydro-powered bitcoin mining area.
  • China rocked the crypto markets last month, reiterating the long-held ban on cryptocurrency trading and mining.