Payments Companies Banned from Servicing Virtual Currency Transactions

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Chinese financial regulators are ratcheting up their crackdown on virtual currencies with the launch of a strict prohibition on payments companies providing services for related transactions.

The People’s Bank of China’s Business Management Department recently released its “Notice Concerning the Undertaking of Self-inspection and Rectification Work in Relation to the Provision of Payment Services for Illegal Virtual Currency Transactions” (关于开展为非法虚拟货币交易提供支付服务自查整改工作的通知), according to a report from the state-run China Economic Net.

The Notice places a strict ban on the provision of services for virtual currency transactions by legal person payment entities from the date of the document’s release.

It also requires that payment organisations adopt effective measures to prevent the use of payment channels for virtual currency transactions, and engage in “self-inspection and rectification work.”

Shortly prior to this the National Internet Finance Association of China issued a risk warning in relation to the prevention of “covert” initial coin offerings (ICO’s).

According to the risk warning an increasing number of “initial mining offerings” had started to appear in China since October of last year, involving the provision of “virtual digital assets” that include LLTokens and BFC points.

In September last year Chinese regulators launched a crackdown on virtual currencies with a strict ban on ICO’s, as well as prohibition on the use of crypto-currencies for financing purposes.

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