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China Merchant Bank Becomes The Latest Bank to Freeze Users’ Credit Cards for Crypto Transactions

Users of China’s Merchant Bank (CMB) that engaged in cryptocurrency transactions of any sort could see their credit card being frozen indefinitely by the bank, latest reports from China have shown. According to local sources, the bank has been actively freezing both credit cards and savings accounts belonging to users they believe engaged in “illegal” transactions involving cryptocurrencies.

However, without a clear ban on cryptocurrencies and crypto-centric transactions for the bank’s customers, many have deemed the bank’s move as shady. Despite being one of the banks with the strictest control measures against cryptocurrencies and crypto trading, China’s Merchant Bank never informed its clients about the upcoming ban nor did it provide clear reasons for freezing their accounts.

CMB’s customer service told a local reporter that they will “actively freeze” credit and debit cards based on “their own judgement” and assessment of risk.

While freezing customer accounts isn’t limited only to China’s Merchant Bank, the practice itself is relatively new in China. Just a couple of years ago, freezing accounts was generally seen by the banking industry as a last resort measure, with only some administrative organs and the country’s justice department having the power to censor and block accounts.

The first instances of the bank freezing accounts were reported back in 2018, when users of its Hong Kong branch received an official announcement regarding changes in its policy regarding crypto transactions. In the announcement, the bank reserved the right to terminate accounts belonging to users they believe were dealing in transactions involving digital currencies.

But, however strict these policies might be, China’s Merchant Bank isn’t the only one that’s been clamping down on crypto activity among its users. Earlier this month, the China Times reported that the Bank of China, the Agricultural Bank of China, the China Construction Bank, and the Industrial and Commercial Bank of China all said that they did, in fact, freeze accounts involved in “illegal activities.” While they mostly considered money laundering and fraud as illegal activities, reports have shown that dealing in cryptocurrencies also found its place on the list.

All of the banks did however say that as long as the transaction itself is legal, and the source of the cryptocurrencies and the channels it goes through are all legal they wouldn’t “voluntarily” freeze user’s accounts.

Nonetheless, the central bank and other regulatory agencies in China have been clamping down on crypto operations since the beginning of the year, writing down the increased effort as part of its battle against fraud, money laundering, and drug-related payments.

With this in mind, many expect that the practice of banks freezing accounts will only become more prevalent in the future. Legal experts in the crypto industry and various OTC merchants have called on traders in China not to use credit cards issued by large Chinese banks to make purchases and withdrawals from cryptocurrency exchanges. Instead, they recommended using small commercial banks.

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