shanghai, september 27 (reuters): beijing’s new blanket ban on all cryptocurrency trading and mining, the most extensive yet in a major economy, has seen cryptocurrency exchanges and service providers rush to sever business ties with mainland customers.
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Shares of a variety of Chinese cryptocurrency-related companies plunged with the ban closing loopholes left in previous regulatory crackdowns on the sector. however, industry executives noted that many companies had already moved key parts of their business out of China.
Reading: Bitcoin crypto services big drops china
Ten powerful Chinese government bodies said in a joint statement on Friday that overseas stock exchanges were banned from serving mainland investors via the internet, a previously gray area, and vowed to jointly eradicate “illegal” cryptocurrency activities.
In response, huobi global and binance, two of the world’s largest exchanges and popular with Chinese users, halted new account registrations by mainland customers. huobi also said it would clean up the existing ones by the end of the year.
“The same day we saw the advisory, we began to take corrective measures,” du Jun, co-founder of the group Huobi, 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 global expansion strategy many years ago and saw steady growth in Southeast Asia and Europe.
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tokenpocket, a popular crypto wallet service provider, also said in a notice to customers that it would terminate services to mainland Chinese customers who are at risk of violating Chinese policies and would “actively embrace” the regulation.
Some of the world’s largest cryptocurrency exchanges originated in China, but Chinese authorities have come to view cryptocurrencies as speculative instruments lacking intrinsic value, prone to wild price movements, and a means of circumventing controls. capital. instead, the Chinese authorities have put their weight behind the development of an official digital currency.
The ban, which comes amid a series of regulatory moves that have affected a range of sectors, from gaming to technology to for-profit tutoring, makes it very difficult for mainland Chinese investors buy or sell the assets unless they leave the country. . however, it stops short of declaring cryptocurrency ownership illegal.
Conversely, while in other parts of the world crypto firms face increased oversight, outright bans are rare.
“I don’t think China’s approach sets a standard for how other countries approach regulating this space,” said John Wu, president of ava labs, a blockchain company.
Stocks that took a beating include huobi tech (1611.hk), a global subsidiary of huobi, which plunged 22%, and okg technology holdings ltd (1499.hk), a fintech company majority owned by xu mingxing, the founder of cryptoexchange okcoin, which lost 19%.
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On Friday, nasdaq-listed Chinese crypto mining machine makers canaan inc (can.o) and ebang international (ebon.o) fell 21% and 7% respectively.
Many Chinese cryptocurrency exchanges closed or moved abroad in 2017, after China, once the world’s largest bitcoin mining and trading hub, banned such platforms from converting legal tender into cryptocurrencies and vice versa. Then, in May of this year, China’s state council promised to ban bitcoin trading and mining.
Amid the crackdown, other types of Chinese crypto firms have moved out of China in recent months, said flex yang, founder and CEO of babel finance, adding that the impact of the latest policy would be “limited.” .
The Chinese provider of crypto financial services opened a new business 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 triggered capital outflows for many Chinese bourses. Some $28.3 billion in capital flowed from Chinese-origin cryptocurrency exchanges like okex, huobi and binance to foreign exchanges in the first half of 2021, a 62% increase compared to outflows for all of 2020, according to consultancy peckshield.
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