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Several institutions including the Agricultural Bank of China have prohibited customers from engaging in cryptocurrency transactions. How does this differ from past bans?

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Several institutions including the Agricultural Bank of China have prohibited customers from engaging in cryptocurrency transactions. How does this differ from past bans?

China Agricultural Bank, which posted and deleted a message on the afternoon of the 21st, has once again issued a "virtual currency ban" statement. This time, major financial institutions such as China Postal Savings Bank, Industrial and Commercial Bank of China, and Construction Bank have also released relevant announcements. How does the content differ from that of 2014 and 2017?

Agricultural Bank Runs Away and Deletes Posts, Other Institutions Follow Suit After Reposting

Shortly after 2 p.m. on the 21st, the Agricultural Bank of China issued an announcement stating that it would prohibit customers involved in virtual currency trading from entering. The announcement was quickly deleted within an hour. Although it cannot be confirmed if there is any relationship, the price of Bitcoin did fluctuate. Between 2 p.m. and 3 p.m., Bitcoin fell from the 34,000 level to the 32,000 level, a drop of nearly 5%.

Several hours later, the Agricultural Bank reposted a similar announcement, which reads:

  1. We firmly do not engage in or participate in any activities related to virtual currency, prohibit customers involved in virtual currency trading from entering, and will increase scrutiny and monitoring of customer and fund transactions. Once such behavior is discovered, measures such as suspending account transactions and terminating customer relationships will be taken immediately, and relevant departments will be notified in a timely manner.
  2. To protect your legitimate rights and the security of your account funds, please actively cooperate with our due diligence investigation work, assist us in fulfilling legal obligations, and combat illegal activities related to virtual currency mining and fund transactions.
  3. Customers should be highly vigilant of the risks associated with activities related to virtual currency, enhance risk awareness and identification capabilities, and guard against being deceived. If you discover any of the above-mentioned behaviors, you can call our customer service hotline to report.

Not only that, major financial institutions including China Postal Savings Bank, Industrial and Commercial Bank, China Construction Bank have also released relevant messages.

Repeating the Old Tune? What's Different This Time?

Although as early as 2014, the Chinese government issued a ban on financial institutions in response to virtual currency financing and speculation, it has reiterated the ban in 2021. What's different this time?

According to media outlet Wu Shuo Blockchain, the difference from 2014 is that this time it is a specific request from the central bank. Furthermore, looking back at past actions, it is also necessary to report the investigation results to the government. Wu Shuo Blockchain did not mention the "Preventing Risks of Token Issuance Financing" related to cryptocurrency financing in 2017, which was also at the request of the central bank, and reporting was required for any related financing activities. Therefore, the slightly innovative part compared to the past should be the "prohibition of customers involved in virtual currency trading" and "cracking down on virtual currency mining," with expanded and specific descriptions.

In addition, they believe that the Agricultural Bank reposted and deleted the announcement because the government required simultaneous posting for the best publicity effect. They believe that although this signifies the government's attention to the matter, it is a relatively mild policy compared to the significant crackdown on mining activities.