From mining to software: China's regulatory crackdown on crypto continues

Published at: July 6, 2021

Financial regulators in China have shut down a Beijing-based software company they suspect of providing services to crypto traders.

In a Tuesday joint statement, the Beijing Financial Supervision and Administration Bureau and the Business Administration Department of the People's Bank of China issued a warning to all financial institutions and payment service providers to not provide any crypto-related services to customers. This includes not permitting businesses to advertise or provide office space for any “virtual currency-related business activities.”

As part of a regulatory crackdown, the two groups announced they had ordered the shutdown of Beijing Tongdao Cultural Development, a company that allegedly provided software services for crypto transactions. Regulators reported they had also suspended the firm’s website.

Local registration records state the firm had been operating since April 2016. According to Chinese journalist Colin Wu, Beijing Tongdao used to be involved in the entertainment industry and had its own virtual currency, Mao Li Coin — or “cat coin.”

Regulators have urged people to “promptly report tips about violations of laws and regulations related to virtual currency transactions” and warned against involvement with crypto-related businesses:

“Do not participate in virtual currency trading activities, do not blindly follow virtual currency-related speculative behavior, and beware of damage to personal property and rights,” said the two regulators. “Personal bank accounts should be cherished and not used for withdrawing or funding virtual currency accounts [...] to prevent illegal use and the breach of personal information.”

The shutdown may suggest China’s regulators are not restricting themselves to solely monitoring mining firms and financial institutions for their involvement in the crypto space.

In June, the People’s Bank of China ordered major domestic banks and mobile payment service providers to deny certain services to customers engaged in crypto-related transactions. The central bank authorized such firms to “cut off transaction funds payment links in a timely manner” for anyone doing so — perhaps authorizing a shutdown of all affected customer accounts, as the Agricultural Bank of China said it would enforce.

Miners in major regions of the country have reportedly been shut down after the State Council’s Financial Stability and Development Committee announced in May that it would be curtailing Bitcoin (BTC) mining. The regulatory crackdown may force some of China’s biggest miners to move to countries with seemingly more open lawmakers, including the United States, the United Arab Emirates and Canada.