China intensifies crackdown on crypto mining industry

Summary

  • Chinese authorities have ordered the financial institutions to refrain from offering crypto services in a latest of a series of clampdown on the digital currency market.
  • The central bank said cryptocurrency trade could lead to illegal activities like money laundering.
  • China plans to launch its own digital yuan, and it is concerned that crypto mining may increase carbon emission.

China has intensified a crackdown on the crypto mining industry over the weekend, renewing calls to national banks and private payment platforms such as Alipay not to offer their services to cryptocurrency exchanges and miners.

The Chinese authorities have ordered the financial institutions to refrain from trading or doing crypto transactions in the latest of a series of clampdown on the digital currency market in the country.

Alipay is a leading digital payment service provider in China owned by the Ant Group.

Source: Pixabay.



Also read: How destructive is energy-intensive crypto mining?


China’s central bank, the People’s Bank of China, has asked officials from the country’s largest banks and the Ant Group Co not to engage in cryptocurrency services.

The government directive was conveyed to the Agriculture Bank of China Ltd., the Industrial and Commercial Bank of China Ltd., the Postal Savings Bank of China Co., and Alipay during a meeting with their representatives over the weekend.

After the meeting, a central bank statement said that cryptocurrency transactions disrupt the financial order and raise the risk of criminal activities like money laundering and illegal cross-border money transfers.

China accounts for a major share of the global crypto mining activities, according to a study.

Also read: What will Ethereum’s price be at the end of 2021?

Following the order, prices of Bitcoin and other cryptocurrencies plunged on Monday. Bitcoin prices decreased by 4.18% to US$32,368 in the premarket session on June 21. Prices of Ethereum went down by 5.97% to US$1953.89. Prices of other cryptocurrencies also fell.

Why is China banning cryptocurrencies?

China wants to promote its own digital yuan and hence wants to ban the private digital currency market. Beijing also claims that crypto mining consumes large amounts of electricity, mainly from coal-based plants, which can jeopardize its emission goals.

In May, China banned financial institutions and payment companies from offering cryptocurrency services and warned them against dubious crypto trading.

The order made cryptocurrency trading and services illegal. Following this, many provinces in China have begun to shut down crypto mining activities. However, the rule has not barred individuals from holding or trading in cryptocurrencies.  

Major cryptocurrency exchanges in the country, like Huobi and OKEs, have said that they would stop selling mining machines and other services in mainland China. They also had promised to suspend future contracts and products in China. Both have said they would follow the new orders. Beijing also had flagged against cryptocurrency as early as 2017.


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