Cryptocurrency exchanges and service providers are scrambling to sever ties with their mainland Chinese clients, following Chinese authorities’ recent crackdown.
Already, two of the world’s largest exchanges, Huobi Global and Binance, have halted new account registrations from mainland customers. Huobi added that it would also clean up existing customers by the end of the year. “On the very day we saw the notice, we started to take corrective measures,” said Huobi Group co-founder Du Jun.
Additionally, TokenPocket, a popular crypto wallet service provider, said it would terminate services to mainland Chinese clients. It added that it would “actively embrace” regulation, and welcomes cooperation from China in blockchain technologies. While effacing crypto, China hopes to have the most advanced blockchain technology in the world by 2025.
China’s crypto crackdown
These firms were compelled to cut off their mainland Chinese clients due to a recent edit from Chinese authorities. Last week, ten Chinese government bodies barred overseas exchanges from providing services to mainland investors via the internet. This had previously been a grey area, but Chinese authorities’ recent statement settled the issue specifically.
“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, PwC crypto leader and partner. “Crypto transactions and crypto services of all kinds are banned in China. No room for discussion. No gray area.”
The announcement detailed activities that would now be prohibited, including any kind of exchange involving virtual currencies. It precludes exchange between legal and virtual currency, exchange between virtual currencies, or trading virtual currencies as a central counterparty. Overseas exchanges providing their services to Chinese residents, the statement highlighted as “an illegal financial activity.”
Additionally, providing intermediary information and pricing services for virtual currency transactions is also illegal. This is the case for token issuance financing, virtual currency derivatives transactions “and other virtual currency-related business activities.”
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