Beijing company suspected of cryptocurrency trading faces China’s central bank’s wrath

Key Takeaways

• The People’s Bank of China (PBoC) has stopped operations of Beijing Tongdao Cultural Development.
• The bank suspects the company of providing services in cryptocurrency trading.
• The Bank warns businesses and banks not to engage in crypto transactions or to assist crypto trading or mining companies in any manner.

YEREVAN (CoinChapter.com) The People’s Bank of China (PBoC) has reportedly stopped the operations of Beijing Tongdao Cultural Development Co., Ltd. The country’s apex bank took the drastic step after suspecting the company of providing services in cryptocurrency trading. The Centra Bank also oversaw the closure of the company’s website as a result.

The Central Bank suspects the Beijing Tongdao Cultural Development of providing software for crypto trading. If the reports turn out to be true, the company will be in direct violation of the ban imposed on the crypto sector by the Chinese authorities.

Business Administration Department of People's Bank of China stopped a Beijing company suspected of providing service for virtual currency transactions. #Bitcoin #Crypto #China

— 8BTCnews (@btcinchina) July 6, 2021

The Bank used this opportunity to warn businesses and banks not to engage in crypto transactions or to assist crypto trading or mining companies in any manner that would contribute to violating the law.

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China’s War on Cryptocurrencies

The decision of the People’s Bank of China does not come as a surprise to those that have followed China’s war on cryptocurrencies.

Although in 2013 the Chinese government defined bitcoin as a virtual commodity and allowed individuals to freely trade Bitcoin online, the positive mood did not last long.

Later that year, Chinese financial regulators, among them the People’s Bank of China, banned banks and payment companies from providing bitcoin-related services.

In September 2017, China banned Initial Coin Offerings (ICOs). According to justifications provided by the authorities, the ban intends to protect investors and curb financial risks. Under the ban, the authorities prohibited companies from converting Chinese legal tender to cryptocurrency and vice versa. It caused an instant 6% drop in Bitcoin prices.

As a result, many trading platforms shut down operations in China. Many of those that could afford it moved their operations to other countries. For example, Chinese blockchain developer Bibox moved to Estonia.

The new dictate also banned financial firms and payment companies from providing services for ICOs and cryptocurrencies. Financial services such as the opening of accounts and registration and were also restricted.

In 2019, the People’s Bank of China notified of its intention to block access to all domestic and foreign cryptocurrency exchanges and Initial Coin Offering websites. The Government later also made clear that they intend to shut down mining in the country and cut down the electricity supply used for mining operations, intensifying the crackdown.

Also Read: More Ethereum (ETH) moves out of crypto exchanges as London hard fork approaches

Bitcoin prices unaffected

Despite the ban, Bitcoin prices looked largely unaffected. After facing a slight dip yesterday, the world’s largest coin regained lost heat at the start of the day. Although a drop is noticed today, it is a result of large sell-offs, thanks to the vast regain in prices.

Altcoins are also showing a healthy steak as a result of BTC’s overall positive performance.

Also Read: Bullish cues for Bitcoin as central banks up gold buying on inflation fears

Will Beijing Tongdao Cultural Development move abroad?

While the ban will affect the company, the latest crackdown may not completely spell its end. Like many companies that have fallen victim to the Chinese crackdown, the company may soon relocate and continue operations offshore.

Many Chinese investors currently continue to trade on platforms owned by Chinese exchanges that relocated overseas. As a result of the new measures and restrictions, companies including Huobi and OKEx had left Chia.

As a software development firm, it is very likely that they may follow the example of other Chinese firms and continue operations offshore.