China’s about to deal a final blow to its bitcoin whales

China is set on stopping its citizens from trading bitcoin.

Chinese authorities plan to widen their crackdown on domestic crypto-trades, by targeting methods including over-the-counter trading, offshore sites used for centralized trading, and peer-to-peer trading of large transactions, according to a report from the state-run Securities Times (link in Chinese) published yesterday (Jan. 16). The report cited an anonymous person close to the Leading Group of Internet Financial Risks Remediation, the country’s top internet-finance regulator. It didn’t specify how authorities will define these platforms or carry out such crackdowns.

Citing unnamed sources, Bloomberg also reported the same day that officials will block domestic access to local and offshore platforms that provide centralized trading, and target people who provide bids and offers for crypto trades in large amounts. Bitcoin’s price fell to the lowest level in more than a month over the news.

Amid fears of financial chaos, the Chinese government in September banned crypto trading on domestic exchanges, effectively putting an end to yuan-bitcoin exchange markets, once the world’s largest driver of bitcoin trading volume. In the wake of the crackdown, China’s major exchange operators like Huobi and OKCoin shifted operations overseas. Founded by their respective parent exchanges, Huobi Pro and OKEx are two Hong Kong-based platforms that provide crypto-to-crypto and over-the-counter trading, whose services are still available to Chinese citizens. Huobi is also planning to set up two crypto exchanges in Japan this year.

China’s crypto investors, meanwhile, have flocked to messaging app Telegram to keep the trades going. Many of these chat groups have attracted hundreds of users negotiating prices directly, and group administrators have implemented “know your customer” policies to prevent fraud and money laundering.

Pan Gongsheng, a vice governor of the Chinese central bank, said in a recent meeting that China will continue to apply pressure on domestic crypto-trades for the sake of financial stability, according to Reuters, citing an internal memo. He was quoted as saying: “Pseudo-financial innovations that have no relationship with the real economy should not be supported.”

Pan, who also heads China’s internet-finance regulator, has vowed to end bitcoin mining in the country. Earlier this month, the body issued a notice asking local governments to “guide” bitcoin-mining operations to make an “orderly exit” from the business. In response, ViaBTC, one of the world’s largest bitcoin mining pools, has raised its management fee from 6% to 50%, citing China’s “scarce” mining resources due to policy reasons.