The price of bitcoin and other cryptocurrencies slid Monday after China’s central bank ordered the country’s largest banks and payment processors to take a more active role in curbing cryptocurrency trading and related activities.
The People’s Bank of China on Monday said it summoned representatives of multiple institutions—including state-owned commercial banks and Ant Group Co.’s Alipay—and told them to “strictly implement” recent notices and guidelines from authorities on curbing risks tied to bitcoin and cryptocurrency fundraising activities. It was the latest sign that Beijing is intensifying its crackdown on unregulated virtual currencies.
slipped to $32,622, down 9% from Friday, according to CoinDesk. That marked bitcoin’s lowest price at 5 p.m. ET since late January.
Ethereum, the second-biggest cryptocurrency by market value according to trading platform Kraken, lost 14% to $1,941. Dogecoin, which started as a joke in 2013 before setting the internet abuzz and shooting up in price this year, 27% to about 21 cents in its eighth consecutive daily decline.
The financial firms were also instructed to go through their systems to investigate and identify customers with accounts at virtual-currency exchanges or that trade cryptocurrencies in the over-the-counter market. In such cases, the institutions have to cut off the accounts’ ability to send or receive money for transactions, the central bank said.
Chinese authorities have stepped up a nationwide campaign against virtual currencies in recent weeks, after a powerful superregulator pledged to crack down on cryptocurrency trading and mining in the country.
The regulatory warnings followed a spike in the price of bitcoin, which traded near $65,000 in mid-April, spurred on by celebrity advocates including Tesla Inc. Chief Executive Elon Musk. It has since lost close to half its value.
Among the factors weighing on bitcoin and its peers are the prospect of greater regulatory oversight of crypto trading in the U.S. and renewed efforts by Chinese authorities to restrain the production of bitcoin by power-hungry computers.
China several years ago imposed bans on domestic cryptocurrency exchanges and digital-currency fundraisings known as initial coin offerings. Authorities also previously instructed payment providers and banks to stop providing virtual-currency trading and related services, and ordered the closing of mines.
Despite those efforts, China has remained a hotbed for cryptocurrency mining.
Up to three-quarters of the world’s supply of bitcoin has been produced in China, but the mining process devours electricity—conflicting with the government’s climate goals.
People in China have also continued to trade bitcoin and other digital currencies via peer-to-peer transactions that involve direct money transfers between accounts.
Some cryptocurrency trading platforms that operate offshore have been facilitating trades between people who want to buy bitcoin with China’s domestic currency, the yuan. In such instances, buyers have used accounts at banks or digital-payments providers to transfer money to people selling cryptocurrencies, often without disclosing the purpose of the transfers.
The PBOC on Monday warned of the risks to economic and financial stability created by virtual currencies, and the potential for the assets to be used for illegal activities. Chinese police recently arrested more than a thousand people who were suspected of using cryptocurrencies to launder ill-gotten funds.
Alipay said it would intensify efforts to monitor and investigate its accounts for cryptocurrency-related transactions, and block or remove offending users. The popular digital payments platform is used by more than one billion people in China and more than 80 million merchants.
Alipay also plans to use risk algorithm models to help detect abnormal transactions, flag suspicious activities, and restrict certain accounts from receiving money. It added that merchants that have engaged in virtual currency transactions would be blacklisted and banished from its platform.
“We reiterate that Alipay does not conduct or participate in any business activity related to virtual currencies,” its statement said.
Five banks, including
China Construction Bank Corp.
Ltd., and Industrial Bank Ltd., said in separate statements that they prohibit the use of their accounts for virtual currency transactions.
They pledged to promptly put a stop to such transactions, close bank accounts and report signs of such activities to…
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