The People’s Bank of China has issued a statement ordering commercial banks to cut off all digital currency-related activities, including over-the-counter digital currency trading merchants. PBoC recently summoned the country’s leading banks and payment providers as part of the fresh crackdown amid the bank’s efforts to step up its CBDC pursuit. The latest is the addition of over 3,000 ATMs in Beijing to the digital yuan ecosystem.
China cracks down on OCT platforms.
China has cracked down on cryptocurrencies for years now, but the local traders have always found a way to go around the restrictions. Their most popular strategy is using over-the-counter (OTC) platforms powered by exchanges such as Huobi and OKEx. Once the trades are matched on the OTC platform, they make the payments via bank transfers or payment platforms like Alipay – peer-to-peer transactions. Now the central bank is seeking to curb this rising market. The central bank revealed that it had summoned banks such as the Industrial and Commercial Bank of China and the Agricultural Bank of China to a meeting to discuss the issue.
PBoC reiterates its previous stance on crypto.
Peer-to-peer trading, which the bank views as speculative, had severely disrupted China’s financial system, PBoC said. In addition, this kind of trading creates the risk of illegal capital outflow from the country as well as money laundering. As it has done several times since 2017, the Chinese central bank reiterated its stance that no bank in China should service digital currency-related clients. Immediately after the meeting, domestic banks and Alipay issued a similar notice to their clients. PBoC has also been working on trials of its digital yuan, which have been quite successful so far.