Monday, October 11, 2021

Cryptocurrencies face big fines in China

Image copyright HBAN 3

Visa, Mastercard and Chinese banks have been told that any use of cryptocurrencies will incur hefty fines.

The Bank of China, one of the country’s biggest lenders, announced the change, which would apply to any customer using virtual currency.

In the statement issued on its website, the bank said it considered virtual currencies to be illegal.

It said that, for now, banks can’t participate in crypto-wallets, but can be used to pay for cryptocurrency.

The bank described the crypto-currencies as “hollow and worthless”.

Back in January, Visa, Mastercard and the Bank of China joined forces to announce a plan to make payments via a bank account in China available to anyone with a current account or a mobile phone number in the country.

Needless to say, that did not fly with the public, many of whom are deeply concerned about any commercial relationship with the country’s rulers, who are pretty keen on blocking financial transactions that could compromise their hold on power.

A day after the initial announcement, the Bank of China, which has played a major role in the project, issued a statement saying that it was changing its stance.

“Virtual currencies, or virtual wallets, allow people to buy and sell virtual currencies such as Bitcoin, and are used in markets.

“Currently, banks are barred from working with virtual currencies, but virtual wallets can be used for online transactions, including making payment in digital currencies.”

Under Chinese law, crypto-currencies, known as virtual currencies, such as Bitcoin, are illegal. The government has outlawed the creation and trading of these, warning that they carry risks.

Rumours that the government would carry out a crackdown on the sector started at the start of the year, leading to a sharp decline in the value of the currency in January.

The policy shift is part of a wider assault on virtual currencies by the Chinese authorities.

The central bank is part of a wider crackdown on virtual currencies, which are being tackled on several fronts.

In December, China shut down overseas operators of virtual currency exchanges and told domestic operators to ensure all clients had identification.

In February, bitcoin trading in China slowed to a virtual halt as the country’s financial regulators cracked down on crypto-currency exchanges.

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