How and Why is China Probing Cryptocurrency Tradings?

Ant Financial, also known as Alipay, is an affiliate company of Alibaba Group. In latest, the company has decided to use Alipay mobile app to assist Chinese regulators in scrutinizing peer to peer cryptocurrency tradings.

In the near future, the company is looking to monitor all digital currency transactions that are made through personal accounts. Furthermore, after monitoring the activities, the company will be controlling account collections according to the circumstances. The company remained resolute while announcing that it will be taking all necessary steps to control and limit account collection. This is quite evident in their statement:

All along, Alipay will resolutely retreat for merchants involved in virtual currency transactions; for personal accounts suspected of virtual currency transactions, according to the circumstances, resolutely take measures to limit account collection or even permanently limit collections.

Accounts beside, Alipay will continue monitoring over the counter (OTC) transactions involving digital currencies performed by websites. Regarding OTC transactions, the company maintains the same stance as it has opted for personal accounts. Although at the moment, the company does not provide any services for virtual currency transactions but it aims to monitor all ongoing transactions. One of spokesman clarified the company’s unchangeable stance on OTC transaction is his statement. He said:

Alipay adheres to the principle of not providing services for virtual currency transactions….We have been and will continue to closely monitor over-the-counter trading activities. If we find any transactions that we suspect are related to virtual currencies, we take appropriate measures including, but not limited to suspension of related fund transfers and permanently restricting payment collection functions of accounts involved.

In addition to all this, Ant Financial has also planned to provide guidance to users to refrain them from indulging in fraudulent schemes. Ant Financial will be using its platform to implement a program of risk prevention education for its users. The company is hoping to safeguard the interests of users by saving them from propaganda. It will be further enlightening users with the risks associated with virtual currency transactions in order to minimize losses and diminutions.

Besides Ant Financial, WeChat has also been playing a vital role in helping regulators to prevent illegal cryptocurrency activities. Many blockchain news accounts on WeChat, that were found associated with some kind of cryptocurrency activity, were immediately blocked in compliance to the country’s law. Some of the biggest cryptocurrency platforms such as Jinse Caijing, Shenlian Caijing etc. were banned as well. These platforms were using WeChat’s user database to promote ICO projects to motivate cryptocurrency investors in the country to participate in those projects. Similarly, a third party app had to face ban by WeChat as the app allowed users to create contract agreements useful for cryptocurrency trade on its platform.

The reason behind Ant Financial and WeChat trying their best to monitor the procedure lies in the decision taken by People’s Bank of China. In September 2017, People’s Bank of China banned all types of ICOs and crypto trading platforms in the country. Following the ban, cryptocurrency exchanges in the country had to move overseas to continue their businesses. But recently, it was disclosed that these exchanges were still operating in the country from overseas offices. So, to deal with the illegal practices by different organizations, People’s Bank of China decided to work with several other departments. This resulted in several outcomes.

Firstly, almost 124 websites, located outside the country but dealing locally through their virtual currency trading platform website that provides transaction services for domestic residents, were dealt with. The control measures demanded monitoring and blocking them in real time. This is where WeChat and Ant Financial played their significant roles.

Second outcome included the disposal of new ICOs and virtual currency transaction related websites, and public numbers. Following its implementation, the public account of Golden Finance and Coin World was closed, as it was suspected to be linked with release of ICO and virtual currency trading hype information.

Finally, the last outcome was to strengthen the clean-up and rectification efforts from the payment and settlement side. And that’s why noticeable measures were taken to improve payment channel management and customer identification. Moreover, risk warnings, monitoring mechanisms and inspection mechanisms were upgraded and relevant payment institutions were instructed to avoid suspicious transactions.

This is why China is seen keen in scrutinizing the crypto trade. It has already pronounced it as illegal, and to prevent and minimize it, the country has been lately involved with companies for monitoring, inspecting and controlling the crypto trade.

Fatir Malik

Electrical engineer by profession, turned into blockchain developer. Fatir contributes regularly with his insights about latest developments in fintech sector. Contact the editor at editor.opinions@blockpublisher.com

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.