China’s central bank has pledged to continue its crackdown on cryptocurrency trading and speculation as part of its work plan for the second half of the year.
The People’s Bank of China has laid out eight key tasks to be tackled following its work plan meeting held on Friday, according to a statement it released on Saturday.
Detailing the seventh task, the PBOC noted that it had cracked down on illegal virtual currency activities, and said that moving forward it would “maintain heavy pressure on virtual currency trading and speculation.”
Persistent pressure
The central bank’s pledge is just the latest in a series of broadsides against the country’s crypto industry. Last month, for instance, a company in Beijing suspected of offering software services for crypto trading was ordered to shut down and deactivate its website. Authorities reiterated at the time that institutions in their jurisdictions were not allowed to provide services such as operational venues, commercial displays, marketing and payment channels for business activities related to cryptocurrencies.
In June, the PBOC summoned some of the country’s big banks, alongside digital payments giant Alipay, to instruct them to cut off financing sources for cryptocurrency transactions.
Also in June, Huobi, OKEx and Binance — some of the world’s biggest cryptocurrency exchanges, which were set up in China — were blocked by the country’s most popular internet search engines and social media platforms. In March, the official Weibo accounts of Huobi, OKEx and Binance were suspended.
The PBOC, nonetheless, is actively developing its digital currency — e-CNY — for what is expected to be broader adoption in time for the Beijing Winter Olympics in February.
Listed as the bank’s sixth task on its work plan is an intention to “steadily push ahead with the development and pilots of the digital yuan.”
Andrew Collier, managing director of Orient Capital Research, told Forkast.News that the private sector would be pushed to one side while the PBOC developed a better understanding of digital currencies.
“[Private companies] are not going to have much of a role until maybe a year from now when the dust settles,” Collier said. “It is possible that the central bank will then say, ‘Look, we now have the plumbing in place, we know how to control it, we’ll allow some private sector companies to enter into this as retail parts of the plumbing, as long as they know how to toe the line.’”
Collier added that the PBOC might outsource some digital currency operations to state-owned banks, because not only did they have the capacity to perform those operations but they were also under the control of the government.
Globalizing the yuan
The PBOC also included promoting the internationalization of the yuan and developing the offshore yuan market as among its tasks for the rest of the year.
Zhiguo He, a University of Chicago Booth economist, told Forkast.News last year in an interview that if successful, e-CNY could act as a way to achieve greater internationalization of the yuan, but that China’s strict capital controls could obstruct its goal of internationalization.
The latest white paper the PBOC released last month, however, said cross-border payments involved various complicated issues, such as monetary sovereignty, foreign exchange policies and arrangements, and regulatory and compliance requirements.
“Though technically ready for cross-border use, e-CNY is still designed mainly for domestic retail payments at present,” the PBOC said in the white paper, adding that the internationalization of a currency was a natural result of market selection.
Matteo Giovannini, a senior finance manager at Industrial & Commercial Bank of China, one of the country’s biggest commercial banks, told Forakst.News last month that the internationalization of the yuan would not take place overnight, and that it would follow China’s growth trajectory on international capital markets, global trade and financial opening up.
Carolyn Wright contributed to this report.