Union Pay Warns Against Illegal Transactions

Union Pay, China’s leading financial services provider, has warned against illegal transactions in a letter. It has listed 25 virtual currency over-the-counter (OTC) transactions. Union Pay advises exchanges to work on a comprehensive self-inspection and rectification process. The financial services provider considers token issuing financing, internet sales lottery platforms and virtual currency trading to be illegal.

In the letter, Union Pay states that Wechat and Alipay, which are its member institutions, to not provide services for illegal transactions. As per various media reports, Wechat and Alipay had been involved in crackdowns in regards to OTC trading of Bitcoin. According to Eleven News, the “Business Management Department of the People’s Bank of China issued the ‘Notice on Carrying out Self-Inspection and Correction of Payment Services for Virtual Currency Transactions’ that required payment institutions to hold self inspection and rectification work, it had prohibited them to provide services for virtual currency transactions and to take effective measure.”

In September 2017, the ‘Announcement on Preventing the Risk of Subsidy Issuance Financing’ clarified that financial institutions and non-bank payment institutions are not allowed to perform business operations related to token financing transactions. This was attributed to the lack of security and potential fraud.

Bitcoin stands its ground as a virtual currency that can be freely traded.