Business major

Cryptocurrency exchanges scramble to abandon Chinese users after Beijing ban

SHANGHAI, Sept.27 (Reuters) – Beijing’s new blanket ban on all cryptocurrency trading and mining – the largest yet by a large economy – has caused crypto exchanges and service providers to scramble to break down business ties with mainland Chinese customers.

Shares of a series of Chinese crypto-related companies have plunged on the ban that fills loopholes left in previous regulatory crackdowns on the industry. Industry executives noted, however, that many companies had already moved key parts of their businesses outside of China.

Ten powerful Chinese government agencies on Friday said in a joint statement that overseas exchanges were banned from providing services to mainland investors through the internet – a previously gray area – and vowed to jointly eradicate crypto activity. “illegal” currency.

In response, Huobi Global and Binance, two of the world’s largest exchanges and popular with Chinese users, stopped new account registrations by customers on the mainland. Huobi also said he would clean up existing ones by the end of the year.

“The same day we saw the notice, we started to take corrective action,” Du Jun, co-founder of the Huobi Group, said in a statement to Reuters.

Du did not give an estimate of how many of its users would be affected, saying only that Huobi embarked on a strategy of global expansion many years ago and has seen steady growth in Southeast Asia. East and Europe.

TokenPocket, a popular crypto wallet service provider, also said in a customer advisory that it would end services to mainland Chinese customers who risk violating Chinese policies and “actively adopt” the regulations.

Some of the largest crypto exchanges in the world originate from China, but Chinese authorities have come to view cryptocurrencies as speculative instruments with no intrinsic value, subject to large price swings, and a means to bypass market controls. capital. The Chinese authorities have instead put all their weight in the development of an official digital currency.

Small toy figures are seen in representations of the Bitcoin virtual currency displayed in front of an image of the Chinese flag in this illustrative photo, April 9, 2019. REUTERS / Dado Ruvic / Illustration / File Photo

Read more

The ban, which comes amid a slew of regulatory measures that have hit a range of industries, from games to tech to tutoring, makes it very difficult for mainland Chinese investors to buy or sell the assets. unless they leave the country. However, it does not go so far as to declare the ownership of cryptocurrencies illegal.

In contrast, while cryptocurrency companies elsewhere in the world face increased scrutiny, outright bans are rare.

“I don’t think China’s approach will set a standard for how other countries approach regulating this space,” said John Wu, president of Ava Labs, a blockchain company.

Stocks that were beaten include Huobi Global’s subsidiary, Huobi Tech (1611.HK), which plunged 22% and OKG Technology Holdings Ltd (1499.HK), a financial technology company majority-owned by Xu Mingxing, the founder of the crypto exchange OKcoin, which lost 19%.

On Friday, Chinese cryptomining machine makers Canaan Inc (CAN.O) and Ebang International (EBON.O) listed on Nasdaq fell 21% and 7% respectively.

Many Chinese crypto exchanges closed or moved overseas in 2017, after China, once the world’s largest center for bitcoin trading and mining, banned those platforms from converting legal tender into cryptocurrency. and vice versa. Then, in May this year, the Chinese State Council promised to ban bitcoin trading and mining.

Amid the crackdown, other types of Chinese crypto companies have left China in recent months, Flex Yang, founder and CEO of Babel Finance said, adding that the impact of the latest policy would be “limited.” .

The Chinese crypto financial services provider opened a new headquarters in Singapore this month. Cobo, a crypto asset management and custody platform, also recently moved its headquarters from Beijing to Singapore.

Previous crackdowns appeared to have resulted in capital outflows for many Chinese stock exchanges. Some $ 28.3 billion in capital flowed from Chinese-born crypto exchanges such as OKEx, Huobi, and Binance to foreign exchanges in the first half of 2021, a 62% jump from outflows for all of 2020 , according to consulting firm PeckShield.

Reporting by Samuel Shen and Andrew Galbraith; Additional reporting by Alun John in Hong Kong; Editing by Edwina Gibbs

Our Standards: Thomson Reuters Trust Principles.

Leave a Reply

Your email address will not be published.