Tue. Jun 8th, 2021

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State Own Bank In China Bans Bitcoin Transactions

2 min read

CITIC Bank has issued a statement prohibiting their clients to use their accounts for Bitcoin transactions. Per a Wu Blockchain report, the state-owned bank seeks to “maintain the legal currency status” of their national currency the Yuan (RMB).

In addition, the bank is allegedly trying to prevent money laundering risks. Therefore, clients will be unable to buy Bitcoin and other cryptocurrencies, use their accounts to trade with crypto, or make any commercial activities related to this asset class. The statement claims the following:

(…) transaction fund recharge, withdrawal, purchase, and sale Relevant transaction recharge codes and other activities are not allowed to transfer relevant transactions funds through our bank account. Once discovered, our bank has the right to take measures such as suspending related accounts (…).

According to Wu, crypto bans amongst banking institutions are mixed. While the country doesn’t forbid its citizens from trading with cryptocurrencies, some institutions have restricted Bitcoin transactions with the same goal as CITIC Bank.

China Could Crackdown on Bitcoin Mining

The country’s perception of cryptocurrencies seems to be changing. While China has made aggressive moves on the national crypto industry, taking crypto exchange executives into custody, and restricting crypto investors’ ability to move their money, the definitive blow could go against the mining sector.

Recently, the Chinese Xinjiang province suffered power outages due to security inspections conducted by the authorities. As it has usually happened in the past, the security measures weren’t targeting the Bitcoin mining industry specifically, but the sector received the collateral damage. Bitcoin’s hashrate dropped by around 20% and congestion in the network rose.

The incident revealed that BTC’s hashrate inside China could be on a downtrend, many miners are migrating to countries with a friendlier view on their activities. F2pool is one of the largest BTC mining pools in the world, its co-founder Chun Wang said the following on this migration:

Here at F2pool in April 2021, the first month in our 8 years of operation, we have seen more $BTC hashrate coming from outside of China than from the inside. The shifting is real. (…) we’ve hired 24 new staff in the past 12 months, only 3 of them hired from mainland China. We’re proactively making the team more country-independent.

China’s environmental requirements could accelerate the trend. Wu Blockchain also reported that Chinese President Xi Jinping stated that “achieving carbon peak and neutrality” is one of his priorities. He added the following:

high energy-consuming projects that do not meet the requirements must be resolutely banned. It will have a negative impact on China’s crypto mining industry.

Bitcoin trades at $57,175 with sideways movement in the lower timeframes. In the weekly and monthly chart, BTC has a 6.7% profit and 1.5% loss, respectively.

Bitcoin BTC BTCUSD
BTC moving sideways in the daily chart, but with bullish momentum. Source: BTCUSD Tradingview

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