The People’s Bank of China met with representatives of Alipay and the Agricultural Bank on Monday to reiterate their obligations regarding cryptocurrencies. In that sense, he reminded them that transactions with Bitcoin are totally prohibited and, therefore, mediation is illegal. Therefore, banks must act against the accounts of their affiliates that are suspected of trading with cryptocurrencies.
Among those summoned to the aforementioned meeting, were executives of the important online payments firm Alipay. Representatives of the third largest bank in the entire Asian country, the Agricultural Bank of China, also participated. With this move, Beijing tries to close all possible doors for the use of digital currencies that are not under its central control.
The move immediately had a negative effect on the price of Bitcoin which fell by more than 10%. At the time of writing, the leading cryptocurrency is trading at $ 29,350 per unit.
In this way, punitive measures against cryptocurrencies are complemented. They went into effect last May, when the first concrete steps to ban Bitcoin mining were announced. Trading with cryptocurrencies was also legally prohibited, but the authorities let it pass. Now, in both cases, both mining and commerce will be jealously guarded.
Banks must monitor transactions that may involve Bitcoin
It is not a surprise that the Chinese government wants to completely eliminate Bitcoin-related transactions. As already highlighted, the rules for the prohibition of services with cryptocurrencies are long-standing in the Asian country. However, amid the widespread offensive against Bitcoin, cutting off its usability is crucial for the authorities.
There are several reasons why the Chinese government’s hatred against the most popular of digital currencies can be explained. According to the version of the authorities themselves, cryptocurrencies, in any of their stages, be it mining or trade, are hostile factors.
The same, explains the People’s Bank of China, «They cloud the financial order. In addition, they feed the risk of criminal activities such as money laundering and illegal cross-border transactions.».
However, there are other reasons that could push the authorities to this general offensive against cryptocurrencies. Thus, transactions with Bitcoin could become serious rivals for the digital currency (CBDC) that the Central Bank of China has been preparing for years. It should be considered that one of the characteristics of the Chinese economy for decades is its hostility to competition.
Financial companies do not hesitate to obey the authorities
As expected, the aforementioned financial institutions will not do anything that goes against the lines emanating from the Communist Party. Thus, the Chinese blogger Wu Blockchain, announced on his Twitter account, that the Agricultural Bank had already ruled. His participation would be of decisive collaboration with the authorities to combat transactions with Bitcoin.
«China’s third largest bank, the Agricultural Bank, released a statement on June 21. They ensure that trading with digital currencies such as Bitcoin is prohibitedWu wrote.
In that same statement, the bank assures that any suspicious behavior detected will be investigated. At the same time, accounts suspected of being used for Bitcoin transactions will be immediately suspended and relationships with those clients will be terminated.
Some of the banks called by the economic authority were the Industrial Bank, Construction Bank and the Commercial Bank of China, among others.