China’s People Bank of China Cracks Down OTC Crypto Merchants

PBoC introduces new crackdown measures, as a result Bitcoin OTC dealers in China are now facing various issues as accounts get blacklisted.

By · Sep 23, 2020 . 6min read

China blacklists OTC crypto merchants news
Source : IStock

The current reports unveil that the People’s Bank of China (PBoC), the nation’s central bank, has commenced blacklisting accounts belonging to large crypto traders in an attempt to battle money laundering. According to a local media outlet WuBlockchain, the recent struggles come in line with a more comprehensive purpose of alleviating and ultimately abolishing criminal earnings and transactions. 

However, PBoC has been colluding with local banks to gain access to different account data and transaction details. It intends to stop the propagation of unlawful funds comprised relating to cryptocurrencies. Owing to the new crackdown measures, China’s over-the-counter (OTC) crypto firms that trade outside public markets like cryptocurrency exchanges and transacts in large numbers have become the scapegoats of this crackdown. 

China to Regulate Crypto?

According to the report, the absence of regulatory clarity would find itself in the blacklist despite its legitimacy. However, China has no laws that govern crypto assets. Hence these function under a legal grey area, making these susceptible to individual banks’ judgment.

The PBoC has blacklisted some OTC accounts. It prevents these accounts from utilizing bank-issued cards for the next three years. However, it also prevents them from conducting online transactions for the next five years. This indicates the restriction of card opening for five years.

The process includes the bank’s risk system flagging and restricting transactions on an account, then reporting the account to the local PBoC branch. This is done so that the data regarding a flagged account is administered across all other Chinese banks. It prevents the firm from opening accounts in other areas. Following this crackdown, several OTC dealers have reportedly terminated their business in fear of repercussions. 

According to the report, the absence of regulatory clarity would find itself in the blacklist despite its legitimacy. However, China has no laws that govern crypto assets. Hence these function under a legal grey area, making these susceptible to individual banks’ judgment.

Moreover, recently the e-commerce giant JD.com has associated with the PBoC & Digital Currency Research Institute to develop mobile apps for China’s digital yuan. It will support mobile applications and blockchain platforms in line with PBoC’s forthcoming central bank digital currency. The two entities will also promote the creation of wallets that support China’s digital currency. 

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