China Is Said to be Cracking Down on a Cryptocurrency Loophole

China is opening a new front in its battle against cryptocurrencies, targeting platforms that allow the nation’s investors to trade digital assets on overseas exchanges, people familiar with the matter said.

Regulators are planning to scrutinize the Chinese bank and online-payment accounts of businesses and individuals suspected of facilitating trades on offshore cryptocurrency venues, the people said, asking not to be identified because the information is private. The accounts’ owners could have their assets frozen or be blocked from the domestic financial system, the people said.

The measures are designed to cut off one of the few remaining avenues for Chinese citizens to buy digital assets. While the country was once home to the world’s most active cryptocurrency exchanges, authorities banned the venues last year and have since moved to block access to platforms that offer exchange-like services.

To get around the crackdown, some firms opened offshore platforms that enable Chinese citizens to buy cryptocurrencies via local bank and online-payment accounts, the people said. It’s unclear which of these platforms have been targeted by authorities, or how much money is flowing through them.

Chinese regulators have been on the forefront of a global push to rein in the frenzy surrounding cryptocurrencies amid concerns over excessive speculation, money laundering, tax evasion and fraud. Investor fears of tighter regulation have helped spur a 45% drop in Bitcoin from its December peak. The cryptocurrency slipped 0.5% to $ 10,698.62 at 9:35 a.m. Hong Kong time.