Crypto exchanges and related service providers are rushing to sever ties with Chinese clients after The People’s Bank of China dubbed all crypto-related activities illegal as the country’s latest crackdown on cryptos unfolds – the broadest yet by any major economy.
The Chinese central bank announced on Friday that all digital currency-related services within mainland China are banned and also warned overseas exchanges providing services to Chinese users to end operations in the country.
The Chinese central bank said that the trading of Bitcoin and other digital currencies over the years had become “widespread, disrupting economic and financial order, giving rise to money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities.”
Cryptocurrency values, especially Bitcoin, have been fluctuating immensely over the past year partly due to the Chinese government’s attempt to crack down on money-laundering activities associated with cryptocurrency.
China had banned crypto-related services in May this year, which was not the country’s first crackdown but certainly marked the beginning of the end for cryptos in the region. As the global Bitcoin mining hub for the past decade, China was responsible for over 65% of all Bitcoin mining across the globe until the recent ban of crypto mining saw mining operations seeking refuge elsewhere.
Crypto exchanges are packing up
China warned local exchanges to stop facilitating trades between fiat and cryptocurrencies in 2017, forcing major exchanges to move operations to crypto-friendly jurisdictions such as Singapore and Malta. However, Chinese users have still been able to access these services which include over-the-counter trading and crypto-to-crypto transactions.
China’s announcement on Friday was specifically aimed at offshore exchanges that target Chinese users, enforcing a ban that would prevent them from hiring local workers for roles in marketing, payment settlements, and tech divisions.
The new ban makes it very difficult for Chinese investors to buy or sell digital assets unless they leave the country, however, it does not specify whether or not the ownership of cryptocurrency is illegal.
One of the world’s leading crypto exchanges, Huobi Global, announced on Sunday that new account registrations for mainland Chinese users will no longer be accepted and that existing accounts of Chinese users will be terminated by December 31, 2021.
Binance followed suit by saying that account registrations using Chinese mobile phone numbers are now blocked from the website and new registrations from Chinese clients will no longer be accepted. The company has also stated that the Binance app will no longer be available for download in China.
TokenPocket, a popular provider of crypto wallet services has also sent out a notice to existing clients that it would no longer provide services that risk violating Chinese policies to customers based in mainland China and that it would “actively embrace” the new regulation.
The announcement of the ban caused a few stocks to plummet, including Huobi Tech which plunged 22% and OKG Technology Holdings Ltd., a fintech company owned by Xu Mingxing, the founder of crypto exchange OKcoin, which experienced a 19% loss in value.