China Continues to Dismantle its Crypto Industry

Financial regulators in the People’s Republic of China closed a software company regulators suspect of providing services to crypto traders. Two regulators issued a joint statement two days ago. We are talking about the Beijing Financial and Administration Bureau and the Business Administration Department of the People’s Bank of China. In fact, they issued a warning to all financial institutions not to provide any crypto-related services to customers. This includes not allowing companies to advertise or provide office space for any crypto-related business activities. Regulators also urged citizens to report tips about violations of laws as well as regulations related to cryptocurrency transactions.

As part of a regulatory crackdown, they made the decision to close Beijing Tongdao Cultural Development. It allegedly provided software services for crypto transactions. Regulators also suspended Beijing Tongdao Cultural Development’s website. The company operated in the entertainment industry and had its own virtual currency called “cat coin”.

Local crypto industry and risk factors

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

Last month, the People’s Bank of China ordered major local banks to deny certain services to customers engaged in crypto-related transactions. The central bank’s order also covers mobile payment service providers. The country’s central bank authorized banks and other institutions to cut off the transaction funds payment links.

The regulatory crackdown also affected crypto mining companies. In May, State Council’s Financial Stability and Development Committee made an important announcement. It announced that it would be curtailing bitcoin mining. Authorities in the province of Sichuan ordered the closure of 26 crypto mines less than a month ago. Before the government’s decision, Sichuan was one of the largest bases for mining in the country. All crypto miners in the sparsely populated regions of Inner Mongolia, as well as Qinghai, were also ordered to shut down in recent months.

The country’s ongoing regulatory crackdown on the local industry continues to alienate main miners. Dubai-based investment company IBC Group decided to end bitcoin and ether mining services in the country. IBC Group plans to distribute its operations to the United Arab Emirates, Canada, the U.S., Iceland, Kazakhstan, and various South American countries. It is not surprising that IBC Group decided to relocate some of its operations to Kazakhstan. The country recently emerged as a major destination for crypto mining operations.