The People’s Bank of China (NBK) held a meeting with representatives of financial institutions.
The regulator banned them from participating in transactions with cryptocurrencies and ordered them to suppress this kind of activity in every possible way.
Who was banned
— TheStreet (@TheStreet) June 21, 2021
According to a press release, the June 21 meeting was attended by:
– Industrial and Commercial Bank of China;
– Agricultural Bank of China (ABC);
– Chinese Construction Bank;
– China Post Savings Bank;
– Representatives of the Alipay payment system.
According to the regulator, speculation in the digital asset market “disrupts the normal order” in the financial sector, creating risks of money laundering and capital outflow abroad.
The NBK confirmed the ban on the participation of regulated institutions in transactions with digital assets imposed in 2017.
Many bitcoin exchanges in China have long switched to trading in cryptocurrency-cryptocurrency pairs, but OTC brokers continue to carry out operations with fiat money.
The regulator has required banks to check if OTC brokers are using their services to provide peer-to-peer exchange for Chinese traders.
The accounts of such users should be blocked, and information about them should be transferred to regulators.
Credit institutions and payment systems are required to comply with customer identification requirements, as well as modernise internal monitoring algorithms to better analyse cryptocurrency transactions.
According to Reuters, after the publication of the NBK notice, all involved organisations promised to comply with the regulator’s order.
For example, ABC said it would conduct due diligence on customers and sever relationships with violators.
Alipay has pledged to create a monitoring system aimed at detecting illegal cryptocurrency transactions.
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The payment system will also blacklist all merchants involved in such transactions.
Bobby Lee, the founder of the Ballet app and former CEO of the Bitcoin exchange BTC China, told Reuters that the NBK did not change the legislation, but demanded compliance with regulations that have been in force for several years.
The Beijing-based Sino Global Capital noted that by its actions the NBK is trying to limit the possibilities of retail traders in terms of speculative trading.