How China’s rural banks’ crisis is showing the need for cryptocurrency

Key Takeaways:

  • Authorities blame criminals for siphoning depositors’ money.
  • China is cracking down on cryptocurrencies.
How China's rural banks' crisis is showing the need for cryptocurrency
How China’s rural banks’ crisis is showing the need for cryptocurrency

LAGOS (CoinChapter.com) — Several rural banks in China have employed intimidation, oppression, and other forms of illegal practices to silence their customers after misplacing their funds.

In detail, thousands of Chinese depositors whose funds were frozen by banks staged protests demanding the return of their money. Chinese authorities who quelled the protest disclosed that a criminal gang siphoned the funds preventing banks from paying depositors.

However, this development shows that financial risk isn’t particular to the cryptocurrency industry alone. It indicates that there are certain levels of risk in both the traditional finance industry and the crypto sector.

To curtail the protest in Henan, authorities agreed the following day to repay depositors. However, this pledge has failed to reassure hundreds of thousands of account holders denied access to their funds.

Meanwhile, the protesters have not swayed because the pledge promise reimbursements to only small account holders whose bank deposits do not exceed 50,000 yuan (7,414 euros). On the other hand, customers with larger deposit repayment have been postponed to a near hypothetical future.

Additionally, a local report indicated that for the banks to cover all the repayments, the local government revenues, which have shrunk massively due to declining land sales, will be drained completely.

China’s Rural Banks’ Harassing And Intimidating Customers

Although several unforeseen circumstances can lead to misplacing customers’ funds, these Chinese rural banks resolved to more extreme measures to address the development.

Notably, the rural banks reportedly opted to harass and intimidate their customers into silencing the situation. Police and local Chinese Communist Party officials also visited customers to warn them that protesting could cost them their jobs.

“I received a call from the police urging me to express my ‘concerns’ in a legal manner and not to participate in demonstrations that could be considered riots.”

Wang, a customer of one of the banks said.

According to Reuters, a woman injured during the protest said authorities came to her house to intimidate her. Others said party officials were harassing their families and loved ones. They revealed that their children were visited in schools to get them to tell their parents to back off.

Interestingly, the rural bank officials also began using China’s mandatory anti-COVID app to serve their interests. As a result, several customers of the banks discovered that their status had suddenly turned “red,” restricting their ability to travel and preventing them from protesting.

These measures enacted by the rural banks show why financial power should be decentralized. It seriously shows why control of the economy should be taken from the government and financial freedom necessary.

China’s Unfriendly Crypto Stance

Meanwhile, not only the Chinese rural banks are cracking down on their customers and clients. So it is worth knowing that China has an unfriendly stance toward digital assets.

China’s central bank last year announced that all crypto-related transactions are illegal, banning all digital tokens. The People’s Bank of China argues that its ban on cryptocurrencies is to curtail financial crime and prevent economic instability.

The PBOC cited the role of cryptocurrencies in facilitating financial crime and posing a growing risk to China’s financial system owing to their highly speculative nature. However, from the recent actions of the rural banks, there’s a clear indication that traditional finance poses more harm.

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