China seems to be doubling down on its efforts to curb cryptocurrencies in the nation. Recent reports have revealed that the People’s Bank of China (PBoC), the nation’s central bank, has started blacklisting accounts belonging to large crypto traders, in a bid to battle money laundering.
According to a report from local media outlet WuBlockchain, the recent efforts come in line with a broader aim of mitigating and eventually eradicating illegal earnings and transactions.
The PBoC has been collaborating with local banks since the start of the year to gain access to various account information and transaction details to prevent the proliferation of unlawful funds, which also comprises of cryptocurrencies.
As a result of this new crackdown measures, China’s over-the-counter (OTC) crypto firms that trade outside public markets like cryptocurrency exchanges and transacts in large amounts that on average is upwards of millions of dollars, have become the victims of this crackdown.
The PBoC has supposedly put some OTC accounts on a “blacklist” that forbids these accounts from using bank-issued cards for the next three years or conduct online transactions for the next five years. These restrictions are placed on all blacklisted accounts.
The process involves the bank’s risk system flagging and restricting transactions on an account, then reporting the account to the local PBoC branch. This is done to ensure that the information regarding a flagged account is shared across all other Chinese banks, to prevent the firm from opening accounts in other areas.
Following this crackdown, several OTC dealers have reportedly terminated their business in fear of repercussions. However, crypto exchange Huobi notes that the blacklisting isn’t targeting regular cryptocurrency sales.
“Normal cryptocurrency transactions are not illegal, and only those involving black money and illicit assets will be frozen.”
Nevertheless, the report added that the lack of regulatory clarity would find itself in the blacklist regardless of its legitimacy.
This is on top of the fact that China has no laws that govern the crypto assets, and hence these operate under a legal gray area, making these susceptible to the judgment of individual banks.
China wants regulated Crypto
Meanwhile, China continues to develop its Central Bank Digital Currency or CBDC and is very close to launching it. Formally known as the Digital Currency/Electronic Payment (DCEP), the project had been in the pipeline for more than 6 years.
As previously reported by The Daily Chain, the nation has been doubling down on the pilot testing of the digital Yuan with its expansion to some of the major cities in nation like Beijing, Tianjin, Hebei, Yangtze River Delta, Guangdong as well as Hong Kong and Macau.