Chinese Banks Directed To Stop Supporting Cryptocurrency By The Country’s Regulators

Chinese authorities have directed banks and payments platforms to not provide any more support to digital currency transactions as the country clamps down further on crypto currencies.

This latest direction was preceded by an order on Friday for shutting down of Bitcoin mining operations in Sichuan province of the country.

The value of bitcoin has dropped by about 50 per cent since it hit a record high of more than $63,000 in April.

A number of major banks and payments companies had recently been summoned by it and directed them to take tougher measures in relation to the trading of crypto currencies, China’s central bank, the People’s Bank of China (PBOC), said on Monday.

The PBOC said in a statement that products or services such as trading, clearing and settlement for cryptocurrency transactions should not be offered by banks.

The guidance of the PBOC was being followed by it and it would undertake due diligence on clients so that illegal activities related to crypto currency mining and transactions are filtered out of the system, said the Agricultural Bank of China , the third largest lender by assets of China. 

A pledge to not facilitate crypto currency transactions any further was also made by China’s Postal Savings Bank.

On the other hand, a pledge to setting up of a monitoring system to detect illegal crypto currency transactions was made by Alipay, Chinese mobile and online payments platform which is owned by financial technology giant Ant Group.

A few days ago on Friday, orders for closing down of Bitcoin mining operations in the southwest province of Sichuan were issued by the local authorities. 

According to research by the University of Cambridge, last year, about 65 per cent of the bitcoin produced globally was accounted for by crypto miners in China and Sichuan was the second largest producer of crypto currencies in China.

As part of a campaign to control financial risks, a wider policy of cracking down on cryptocurrency mining and trading was adopted by China’s cabinet, the State Council, last month.

A price chart phenomenon known as a “death cross” will potentially cause further falls in the price of bitcoin, some analysts have warned. “Death cross” takes place when a short-term average trendline crosses below a long-term average trendline.

And with increasing worries among investors about tougher regulation of digital currencies in countries around the world, there was a fall in value of other cryptocurrencies as well.

In a separate development, the world renowned auction house Sotheby’s announced that any bidder would be allowed to use cryptocurrencies to pay for a rare pear-shaped diamond which the auction house expects to fetch a rice of as much as $15m at an auction set for next month.

It is the first time that such a large diamond has been offered in a public sale with cryptocurrency.

(Adapted from BBC.com)



Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability

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