China Intensifies Crypto Crackdown Telling Banks to Stop Digital Currency Transactions

China has intensified its clampdown on cryptocurrencies, telling banks and payments platforms to stop supporting digital currency transactions.

That follows an order on June 18 to shut down Bitcoin mining operations in Sichuan province.

The price of Bitcoin slumped by more 10% on June 21 but stabilized in Asian trading on June 22.

The value of the cryptocurrency has fallen by around 50% since hitting a record high above $63,000 in April.

On June 21, China’s central bank, the People’s Bank of China (PBOC), said it had recently summoned several major banks and payments companies to call on them to take tougher action over the trading of cryptocurrencies.

In a statement, the PBOC asked banks not provide products or services such as trading, clearing and settlement for cryptocurrency transactions.

China’s third-largest lender by assets, the Agricultural Bank of China, said it was following the PBOC’s guidance and would conduct due diligence on clients to root out illegal activities involving cryptocurrency mining and transactions.

China’s Postal Savings Bank also said it would not facilitate any cryptocurrency transactions.

Mobile and online payments platform Alipay, which is owned by financial technology giant Ant Group, said it would set up a monitoring system to detect illegal cryptocurrency transactions.

The latest measure came after authorities in the southwest province of Sichuan on June 18 ordered Bitcoin mining operations to close down.

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In 2020, China accounted for around 65% of global Bitcoin production, with Sichuan rating as its second largest producer, according to research by the University of Cambridge.

Last month, China’s cabinet, the State Council, said it would crack down on cryptocurrency mining and trading as part of a campaign to control financial risks.

Some analysts have warned of potential further falls in the price of Bitcoin due to a price chart phenomenon known as a “death cross”, which occurs when a short-term average trendline crosses below a long-term average trendline.

Other cryptocurrencies also fell as investors worried about tougher regulation of digital currencies around the world.

Separately, the auction house Sotheby’s said that a rare pear-shaped diamond that is expected to sell for as much as $15 million can be bought at an auction next month using cryptocurrencies.

It is the first time that such a large diamond has been offered in a public sale with cryptocurrency.