China is busy banning Bitcoin — again.
The People’s Bank of China (PBOC), the country’s central bank, has ordered four state-owned banks as well as major payment service provider AliPay to cut off any Bitcoin-linked transactions. Following a discussion held with a number of financial institutions, the PBOC issued a statement saying that “virtual currency transactions and speculative activity have disrupted the normal order of the economy and financial [system]. They increase the risks of illegal cross-border transfers of assets and illegal activities such as money laundering.”
Further, the central bank said it had ordered all banks and internet payment service providers to cease providing account opening, registration, trading, and settlement services in relation to activities involving cryptocurrencies.
The move echoes a statement published by the Financial Stability and Development Committee of China’s State Council late last month, which summarized a State Council meeting by Vice Premier Liu He.
As part of the committee’s commitment to control financial risk, the statement noted the need for China to “crack down on Bitcoin mining and trading behavior and prevent individual risk from being passed to society.”
Until earlier this month, some were skeptical of the latest developments in China — the country has a long history of Bitcoin bans. In fact, in 2013, the PBOC imposed a ban that prohibited banks from handling Bitcoin transactions based on the fact that Bitcoin isn’t backed by any central authority.
Yet China has been carrying through on its warnings to crack down on Bitcoin mining, with some of the key regions used for mining announcing partial restrictions or full clamp downs. Only on Friday, the Sichuan Provincial Development and Reform Commission issued a joint notice with the Sichuan Energy Bureau demanding the shutdown of the mining operations in the region.
Although the PBOC’s latest statement is far-reaching, it may not be as surprising to affected companies and individuals within China as it is for those not directly affected by the developments. Primitive Ventures founder Dovey Wan commented on the move that the frequency of checking account freezes on the basis of alleged connections to OTC trades have been “increasing drastically since March.” Therefore, many had been prepared for further restrictions even prior to the announcement.
The move, Wan continued, would primarily affect those who rely on RMB and could now find themselves in the inconvenient position to be limited to peer-to-peer trading options. Other than that, however, the crackdown had been largely anticipated.
In fact, the first mining operators reacted soon after the initial announcement by the Financial Stability and Development Committee of China’s State Council. At the time, BTC.TOP founder Jiang Zhouer wrote on Weibo that he believed the situation was “not as bad as everyone thinks.” The original Weibo post is no longer available, presumably due to China’s recent crackdown on Bitcoin-related accounts on the social media platform.
Regardless, Jiang announced that his firm would establish its mining farms in North America in the future and predicted that “eventually, China will lose crypto computing power to foreign markets.”
Meanwhile, CNBC’s Eunice Yoon shared on Twitter that a Chinese logistics firm had confirmed it was airlifting three tonnes worth of mining equipment to Maryland in the U.S. — a visual demonstration of an ongoing hash rate shift away from China and towards North America.