Cryptocurrency exchanges and providers of crypto services are scrambling to sever business ties with mainland Chinese clients, after Beijing issued last week a blanket ban on all crypto trading and mining.
In a culmination of years of efforts to rein in the sector, 10 powerful Chinese government bodies including the central bank said overseas exchanges were barred from providing services to mainland investors via the internet – a previously grey area – and promised to jointly root out “illegal” cryptocurrency activities.
“While this is not a surprise as China has ‘banned’ crypto many times in the past, this time there is no ambiguity,” said Henri Arslanian, PricewaterhouseCoopers (PwC) crypto leader and partner, on Twitter. “Crypto transactions and crypto services of all kind are banned in China. No room for discussion. No gray area.”
Huobi Global and Binance, two of the world’s largest exchanges and popular with Chinese users, have stopped new registrations of accounts by mainland customers. Huobi also said it would clean up existing ones by the end of the year.
“On the very day we saw the notice, we started to take corrective measures,” Du Jun, Huobi Group co-founder, said in a statement to Reuters news agency.
Du did not give an estimate how many of its users would be affected, saying only that Huobi, once the world’s biggest crypto exchange, had embarked on a global expansion strategy many years ago and seen steady growth in Southeast Asia and Europe.
Bitcoin fell by as much as 8.9 percent on Friday to about $40,700 but recovered over the weekend. It was trading above $43,000 as of 8:10am on Monday in Hong Kong.
Shares in crypto-related firms tumbled on Monday with crypto asset manager and trading firm Huobi Tech plunging 23 percent and OKG Technology Holdings Ltd, a fintech company majority owned by Xu Mingxing, the founder of crypto exchange OKcoin, losing 12 percent.
TokenPocket, a popular service provider of crypto wallets, also said in a notice to clients that it would terminate services to mainland Chinese clients that risk violating Chinese policies and would “actively embrace” regulation. It added it welcomes cooperation from China in blockchain technologies.
Many Chinese crypto exchanges shut down or moved offshore in 2017, after China, once the world’s biggest Bitcoin trading and mining centre, banned such platforms from converting legal tender into cryptocurrencies and vice versa. Then in May this year, China’s State Council pledged to ban Bitcoin trading and mining.
Amid the crackdown, other types of Chinese crypto companies have been moving out of China over the past few months, said Flex Yang, founder and CEO of Babel Finance, adding that the impact from the latest policy would be “limited”.
The Chinese crypto financial services provider this month opened new business headquarters in Singapore.
Cobo, a crypto asset management and custodian platform, also recently moved its headquarters from Beijing to Singapore.