The Chinese government’s crackdown on the crypto sector is picking up pace and results are showing. Recently, the country’s largest banking institution AgBank has announced that it will comply with the new government regulations. This will result in renewed difficulties for some Chinese users to conduct crypto-fiat transactions and add problems for merchants trying to accept crypto payments.
The Sudden Chinese Government Onslaught
The Chinese government’s recent move to crackdown on private cryptocurrency use in the country has caught many by surprise. Hardly 2 months ago, top Chinese central bank officials praised the sector and hinted that the country was considering opening itself up to the crypto sector. But now, with the sudden and immense crackdown from the officials, the expected pro-crypto policy is no longer an expected outcome in the near future. Instead, the existing users within the heavily censored country are being harassed and investigated.
The AgBank statement came after its head held a meeting with the Governor of People’s Bank of China (PBoC) top brass. AgBank ranks third in the entire world when it comes to assets under management. The latter informed the AgBank that all accounts suspected of doing crypto-related transactions should be flagged and shut down. According to previous estimates, while cryptocurrency use in China isn’t widespread, there are still a lot of crypto users in the country. Many Chinese companies also used to accept Bitcoin as under-the-cover payments for banned and controlled substances. However now they might expect to stop accepting it or go even further underground.
According to the statement from the PBoC to the banking institutions:
Institutions must comprehensively investigate and identify virtual currency exchanges and over-the-counter dealers’ capital accounts, and cut off transaction funds payment links in a timely manner; they must analyze the capital transaction characteristics of virtual currency trading hype activities […] and ensure that relevant monitoring and handling measures are implemented.”
Banks aren’t the only institutions being targeted. The government has also started operating against the Chinese Bitcoin mining facilities. China until recently was home to some of the biggest Bitcoin mining facilities in the world. However, now things are starting to change with the latest pressure from the the authorities. It maybe because of their immense power usage or maybe because the government has decided to go against the entire crypto scene altogether. The exact reason for the sudden u-turn on crypto is still unknown but it is expected that it will contribute to a decline in the Chinese dominance and give space to other players around the world.
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