PBoC: Blocking Cryptocurrency-related Payment Service
19 January 2018 Beijing-A document released by the Department of Payment and Settlement of PBoC was quietly posted around in the community. The document asks all units should strengthen monitoring of daily trading, shut down payment channel for accounts related to cryptocurrency and settle funds in a proper way. Banks should submit report of self-inspection and measures taken to the PBoC by 20 January, 2018. The document is rated as “urgent”.
As the community has been fooled by fake documents before, people are skeptical about the authenticity of the document. For example, there should be a “red stamp” on the footing as verification. Also there are some wording in the document seems a bit “unusual”. But today the document is verified true by many mainstream medias.
As per a conference minute exposed earlier this month, a total of 85 ICO platform and 88 exchanges were shut down by the end of 2017 in China. As a result, OTC trading has been booming as cryptocurrency trading between individuals is still legal. Therefore China is escalating clampdown on OTC trading. 4 specific measures are mentioned:
1. Local authorities must shut down OTC exchanges (including so-called oversea platform) and crack down individuals (chat group owner) or entities acting as market-maker.
2. Block website or suspend APP of OTC exchanges that provides trading service for Chinese users.
3. Payment processor that provides settlement service for cryptocurrency trading must be rectified. Any entity that violates the No.289 document must be severely punished.
4. The State Administration of Foreign Exchange (SAFE) should crack down any oversea platform that involved cross-border funding.
Why the authority is so intense on containing cryptocurrency trading?
Bitcoin and cryptocurrency trading has been regarded as an effective way to bypass capital control in China. The authority has been working relentlessly to stop the capital flight since 2015 and the effort seems to be paying off in 2017.
According to the data from the PBoC, China’s foreign exchange reserves in December reached 3.14 trillion USD, with a projected value of 3.1268 trillion USD, an increase of 20.7 billion from 3.1193 trillion in November. However, at the end of December, the foreign exchange payment is down by 36,319 billion yuan from the previous month.
But the annual number looks good. In 2017, the foreign reserve of China rose by $129.4 billion, the very first time after massive capital outflow in 2015 and 2016.
But the reason behind is worth pondering. Such increase is backed by unprecedented issuance of USD-denominated bonds.
In the year of 2017, a total of 2,157 China-based US dollar bonds were issued, raising a total of 313.9 billion USD. The number of bonds and the amount were 2.43 times and 6.23 times to that of 2016 respectively. China’s foreign trade has a surplus of more than 400 billion U.S. dollars. Under these circumstances, our foreign reserves have only increased by more than 100 billion USD, which has been achieved under a strict capital control policy.
The foreign reserve of China is under stress test. Blocking crypto-trading may not help much but any loopholes should not be ignored.
Learn cryptocurrency and digital assets since 2013 and co-founder of 8btc in 2014. Co-author of 2014-2015 Digital Currency Development Report(2015) and first author of Investment Guidelines To Blockchain Digital Currency (Published in June 2017 ISBN:9787300239286).
COMMENTS(5)
#PBoC: Blocking #Cryptocurrency-related Payment Service | http://NEWS.8BTC.COM http://news.8btc.com/pboc-blocking-cryptocurrency-related-payment-service …
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Amazing…
They tell me what I can spend MY money on…
Rumor to be vechain?
is this a problem for binance?
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