The news: The People’s Bank of China (PBOC) banned all cryptocurrency transactions and said it’s illegal for overseas crypto exchanges to provide services to Chinese consumers, per The Wall Street Journal.
PBOC said the ban was to mitigate crypto trading risks and maintain national security, according to a statement posted on its website. Many regulators are concerned crypto transactions can be used to fund illicit activities like money laundering.
How we got here: China’s stance on cryptos has become increasingly aggressive despite the global surge in crypto trading and payments.
The opportunity: China’s private crypto crackdown can help drive adoption for the digital yuan, which is expected to make its official debut at the Beijing Winter Olympics in early 2022.
The bigger picture: China’s latest crackdown on cryptocurrencies coincides with the government’s clampdown on domestic retail and financial conglomerates—suggesting that the government is looking to regain control of the country’s financial system.
In April, the Chinese government slapped Alibaba with a whopping $2.75 billion fine following a monthslong investigation. The following month, PBOC ordered the country's largest tech players, including Tencent, to get rid of all their financial services unrelated to payments. And just this month, the government ordered Ant Group to break off its loans business from subsidiary Alipay.
Related content: Check out our Blockchain in Payments report to get insights into cryptos, CBDCs, and stablecoins, as well as their payment use cases, opportunities, and challenges.