The Ministry of Public Security has launched a nationwide "card-cutting operation". What is the impact on the cryptocurrency market? OTC may experience a brutal reshuffle

The "Card Cutting Operation" is being carried out across the country. This name sounds very scary, especially for OTC traders in the currency circle and ordinary cryptocurrency industry professionals who are worried about card freezing. It's as if they see their bank cards disappearing, but is it really so? Industry insiders said that in the short term, the OTC industry will suffer a brutal reshuffle, but in the long run, it will not have a negative impact on the cryptocurrency industry.

According to China Changan Net, on October 10, Du Hangwei, Deputy Minister of Public Security and Convener of the Inter-ministerial Joint Conference, attended the State Council's Inter-ministerial Joint Conference on Combating and Managing New Telecom Network Crimes, and said that the illegal opening and selling of phone cards and bank cards is an important root cause of the continued high incidence of telecom network fraud cases, and the harm is very serious. We must effectively enhance the sense of mission, responsibility and urgency of carrying out the "card cutting" operation , and severely crack down on and rectify the illegal opening and selling of phone cards and bank cards.

The meeting required that a large number of illegal criminal gangs that set up and sell "two cards" be captured, a large number of key areas where "two card" crimes are rampant be rectified, a large number of "two card" law-breaking and dishonest persons be punished, and the illegal industry chain of setting up and selling "two cards" be cut off with all efforts, and the breeding ground for telecommunications network fraud crimes be resolutely eradicated.

The meeting required that a mechanism be established in accordance with the principle of "whoever opens the card is responsible", work measures be improved, technical means be improved, interviews and accountability be strengthened, and all efforts be made to cut off the channels for illegal opening of "two cards". Credit punishment should be strengthened, and the units and individuals and related organizers who rent, sell, lend, or purchase bank accounts or payment accounts identified by the public security organs, and the units and individuals who open bank accounts or payment accounts by impersonating others or fabricating agency relationships, will be suspended from their non-counter bank account business and all payment account business for 5 years, and they will not be allowed to open new accounts.

The Ministry of Industry and Information Technology, the People's Bank of China, the Supreme People's Court and the Supreme People's Procuratorate also participated in the meeting. It is reported that since the beginning of this year, a total of 155,000 telecommunications and Internet fraud cases have been cracked nationwide, 145,000 suspects have been arrested, an increase of 65.6% and 74.1% year-on-year respectively, and more than 100 billion yuan of funds involved in the cases have been successfully stopped and frozen.

Wu said that the blockchain had previously exclusively disclosed that many OTC merchants were on the "disciplinary list" and all bank cards under their personal identities stopped non-counter transactions. "No card opening for five years, no non-counter opening for three years", which is suspected to be related to the card-cutting action. In the OTC transactions of cryptocurrencies, due to receiving black money or being frozen for cryptocurrency, the behavior of changing bank cards or even buying and selling bank cards often occurs. Some merchants engaged in RMB OTC will require employees to use personal bank cards to conduct transactions.

Of course, the more serious case involves telecommunications fraud. In early September, a resident in Yangling, Shaanxi was defrauded of more than 500,000 yuan by a gang in the form of a "pig-killing scheme". The police found that about 500,000 yuan of fraudulent funds flowed into OKEx and were exchanged for digital currency through the OTC merchant, which led to the cross-provincial pursuit of the OTC merchant in Jiangsu. On the evening of the 12th, the buying price of USDT on Huobi was higher than the selling price, indicating cash pressure.

Reference: Exclusive: Major OTC traders on mainstream platforms involved in Shaanxi "pig-killing case", Exclusive: Multiple OTC traders included in the central bank's disciplinary list, banks strengthen risk control

However, the article "Foreign Trade Account Freeze" that went viral a week ago is suspected of generalizing and citing a few local behaviors as the core reason for freezing accounts. But in fact, the national top-level plan to crack down on telecom crimes is the reason why a large number of suspected accounts have been frozen, especially some historical behaviors have also been held accountable, so there has been a large-scale freezing of accounts, such as the previous Dongguan incident.

For the cryptocurrency industry, due to the inherent anonymity of cryptocurrencies such as Bitcoin, they have become a channel for money laundering transactions in some gray and black industries. Telecommunications fraud, pornography, gambling and drug use cryptocurrencies to launder money are becoming more and more common. However, for ordinary and normal investment users, the country's increased efforts to crack down on telecommunications fraud can reduce the influx of black money from outside and avoid accidental harm to ordinary users to a certain extent.

Industry insiders also suggested and hoped: First, the regulatory authorities' crackdown should be continuous and institutionalized, otherwise telecom fraud and money laundering will resurface after the crackdown; second, as the meeting required "whoever opens the card is responsible", banks should establish better risk control mechanisms to prevent the influx of black money; third, Bitcoin trading and investment are not illegal, and banks and regulatory authorities should avoid expanding the crackdown and accidentally hurting ordinary investors.