Each year, China’s gamblers send over $146b abroad, most of it through digital currencies, posing a threat to the security of the country.
That is the view of Liao Jinrong, a Chinese Ministry of Public Security official, who spoke at the Ninth China Payment and Settlement Forum in Beijing on Thursday. In addition to the top cops of the country, the Forum also featured contributions from China’s People’s Bank and the Foreign Exchange State Administration.
Liao reported that the annual outflow of RMB1t (US$146.6b) resulted in so-called ‘cross-border’ gambling, most of it to both land-based and online gambling operators in the Philippines, Myanmar and other jurisdictions in the Asia-Pacific.
Chinese authorities have previously claimed that such outflows of capital pose a threat to China’s economic stability and have targeted record fines on online gambling payment processors in an attempt to discourage others from straying away from the straight and narrow.
The mention of Myanmar is significant, given that in August, in Myanmar’s southeastern Karen state, Beijing disavowed any connexion to gambling operations in a special economic zone for ‘blockchain technology.’ The organisers were linked to a cryptocurrency company based in Singapore that aimed to promote “finance and business services” in the region.
Liao ‘s speech identified new payment technologies, including cryptocurrencies, as posing new challenges to the efforts of the authorities to disrupt the outflow of cross-border gambling. In order to track digital money transactions, Liao strongly urged financial outfits to increase their game, with the implied threat of retribution for companies that failed to heed this advice.
This month, an online gambling payment processing service built on the Tether USDT’ stablecoin ‘crypto token was disrupted by Chinese authorities. It was claimed to be the first successful action against a ‘fourth party’ processor of crypto-based online gambling.
China has other self-serving interests in this initiative, despite its antipathy to gambling, as the country is currently creating its own ‘digital yuan’ that will provide a state-supported (and state-controlled) alternative to crypto.
Fan Yifei, deputy governor of the central bank, called the digital yuan on Thursday “an important part of the supply-side structural reform of the financial industry.” Fan said the technology “has achieved initial results and is undergoing internal closed testing.”
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