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Chinese Police’s Crackdown on Illegal Business of Bank Cards May Conspire Against Crypto OTC Trading

On October 10, the Ministry of Public Security of the People’s Republic of China held a conference on cracking down on new types of illegal crimes in telecommunication networks. Du Hangwei, Vice Minister of public security said bank cards is an important source of the continuous high incidence of telecom network fraud cases.

The conference emphasizes the crackdown on the illegal crime of selling telephone cards and bank cards. Units or individuals that open bank accounts or payment accounts by counterfeiting others’ identities or fictitious agency relations will be forbidden to use bank-issued cards for the next three years or conduct online transactions in the next five years.

For the cryptocurrency industry, because of the inherent anonymity of cryptocurrencies like bitcoin, it has become a money-laundering channel for some black industries like telecom fraud, gambling and drug. However, for ordinary individual investors, the government’s efforts to crack down on Telecom fraud can reduce the inflow of black money, and to a certain extent avoid the injury of ordinary users.

Some crypto OTC accounts have reportedly been put on a “blacklist” maintained by the PBoC and are forbidden to use bank-issued cards for the next three years or conduct online transactions in the next five years. In the OTC transactions of cryptocurrency, it is common to change bank cards or even buy and sell bank cards because of receiving black money. Some OTC merchants require their employees to use personal bank cards for transactions.

In conclusion, Bitcoin trading and investment are not an illegal business in China. Banks and regulators should avoid hurting ordinary investors. Regulators need to enhance in the follow-up work at the legislative level, which has positive significance for the cryptocurrency industry in the long run. But for the OTC industry, it will experience a cruel reshuffle in the short-term during the government’s crackdown, and the surviving team will gain more benefits in the market.

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