Clock Ticking on Cryptos in China as Central Bank Spells Out Latest Crackdown

Banks are given until January 20 to shut down payment channels funding cryptos.

China’s stance against cryptocurrency has hardened yet again, with Beijing ordering its most stringent measures to date in a bid to halt the proliferation of crypto trading. The country has reportedly released a circular ordering the cessation of all funding related to crypto services or funding.

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The hardline stance runs in lock step with China’s continual agenda to phase out crypto mining and trading in the country. Each successive move has dampened crypto enthusiasm, though doing little to deter the price of Bitcoin long term.

The trajectory of China’s crackdown on cryptos follows a very clear path, notably since last September’s shutdown of exchanges. Since then, the country has taken additional measures and stances, all of which are aimed at mining and service operations. Its most recent circular entails an order for banks to stop funding cryptos, using tough language and self-inspection tests to ensure maximum effectiveness.

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January 20 deadline

A document released by the central bank spelled out the measures: “Every bank and branch must carry out self-inspection and rectification, starting from today. Service for cryptocurrency trading is strictly prohibited. Effective measures should be adopted to prevent payment channels from being used for cryptocurrency settlement.”

To reinforce a sense of urgency however, banks were given a tentative deadline of January 20 to comply with the measures: “Banks should enhance their daily transaction monitoring, and the timely shut down of the payment channel once they discover any suspected trading of cryptocurrencies.”

The circular largely focused on handling capital settlements to avoid any financial losses by cryptocurrency investors from escalating into a public display of protest. Indeed, any abrupt upheaval is certainly capable of investor losses, which the bank has looked to prevent. Still, the measures clearly reflect the sharpening of Beijing’s teeth against cryptos.

The circular follows on the heels of an earlier update this week in China, which saw similarly harsh measures against cryptocurrency trading. This week, the Chinese government targeted multiple online platforms and mobile apps providing trading services to cryptocurrency enthusiasts.

Consequently, authorities moved to block domestic access to all Chinese citizens as well as the international platforms offering cryptocurrency trading services. The Chinese government also began targeting individuals and companies that provide market making, settlement and clearing services for centralized trading, though the fate of small peer-to-peer transactions is unknown.

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