China directs banks to end crypto services

Posted: 19 January 2018 12:45 pm
Shanghai bull small

Banks to improve monitoring and shut down payment channels if they discover any suspected trading.

China’s central bank has instructed the country’s financial institutions to cease providing cryptocurrency services, including the prevention and suspension of payment channels used for digital currency settlements.

The People’s Bank of China (PBoC) issued the mandate in an internal statement to Chinese banks this week, according to the South China Morning Post. The document was not published on the central bank’s website.

This new directive underpins the government’s ban on cryptocurrency exchanges, enacted in September 2017.

“Every bank and branch must carry out self-inspection and rectification, starting today,” the document said.

“Service for cryptocurrency trading is strictly prohibited. Effective measures should be adopted to prevent payment channels from being used for cryptocurrency settlement. Banks should enhance their daily monitoring, and the timely shut down of the payment channel once they discover any suspected trading.”

The PBoC has imposed a January 20 deadline for enforcement of these measures. The document asserts that banks should efficiently supervise capital settlements to thwart stakeholder complaints and public protests.

Despite being home to the largest cryptocurrency mines in the world, China has an unfavorable view of crypto. Virtual currencies aren’t considered legal tender and banks are banned from holding and distributing them.

Bloomberg reports that Chinese authorities are working hard to end all over-the-counter trading, as well as putting a stop to peer-to-peer networks and blocking registered firms still processing offshore crypto trades.

Similarly, earlier this week, Bank Indonesia expressed that virtual currencies, including bitcoin, are no longer recognized as a legitimate form of payment and are forbidden for use in all financial transactions.

A number of the world’s central banks, and the governments responsible for them, have called for tighter regulation of cryptocurrencies in order to prevent misuse, deter anonymous trading and boost transparency.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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