Chinese Central Bank PBoC Asks Alipay and State-Owned Lenders to Cut Off Crypto Transactions

In a recent report, Chinas central bank has issued a statement ordering Ant Group and four state-owned banks to terminate all digital currency-related activities, linked to bitcoin, raising its restraints on cryptocurrencies in the country.

The Peoples Bank of China (PBOC) organized a meeting and summoned major financial institutions like the Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China, China Construction Bank, and Postal Savings Bank of China.

Additional members included the Fujian-based Industrial Bank, and Ant Group subsidiary Alipay, which along with Tencent HoldingsWeChat Pay controls the majority of Chinas mobile payments market.

Cryptocurrency transactions and speculative activities have disrupted the normal economic and financial order. They increase the risks of crimes such as illegal cross-border transfers of assets and money laundering, which severely infringe upon the property safety of the general public.- statement by the PBOC. 

In this meeting, the PBOC ordered other financial institutions to prevent payment services for any client accounts believed to be involved in cryptocurrency transactions. Services such as new account opening, registration, and trading for any cryptocurrency-related activities must be discontinued immediately.

Every organization should comprehensively identify fund accounts linked to cryptocurrency exchanges and over-the-counter dealers, and cut off [their respective] payment avenues immediately,” it said.

Shortly following this gathering, the banks, and AliPay circulated notices to their clients. These circulars warned them that if found to be indulged in digital currency activity, it would serve as grounds for termination of the account as well as reporting to the relevant authorities.

Bitcoin, which has been bearish over the last three months, fell further after PBOC's warning. On Monday, June 21, after the announcement, BTC price plunged further and has moved closer to $30,000 levels. 

The crackdown on payment operators comes after Chinese regulators targeted local crypto miners over the last few weeks. 

The National Development and Reform Commission (NDRC) branch in Sichuan ordered to shut down, and banned all kinds of cryptocurrency mining activities last Saturday, June 19. Sichuan is popular among cryptocurrency miners because of its abundant and cheap hydropower supply.

The prior assessments have revealed that 65% to 75% of the worlds bitcoin mining occurred in China – mostly in these four Chinese provinces: Xinjiang, Inner Mongolia, Sichuan, and Yunnan. 

Over the last month, the BTC hashrate has corrected more than 40%. As per the data from Blockchain explorer, the BTC hashrate has tanked to 120m TH/s. The BTC price has corrected more than 50% from its all-time high of $64,000 in April 2021. With this correction, the BTC market cap also dives under $600 billion.