Cryptocurrency exchanges and service providers are scrambling to sever ties with their mainland Chinese customers, following the recent crackdown by Chinese authorities.
Already, two of the world’s largest exchanges, Huobi Global and Binance, have halted new account registrations from mainland customers. Huobi added that he 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, has said it will end services to customers in mainland China. It added that it would “actively embrace” regulation, and welcomes cooperation from China in blockchain technologies. While wiping out crypto, China hopes to have the world’s most advanced blockchain technology by 2025.
The crackdown on cryptos in China
These firms were compelled to cut off their mainland Chinese clients due to a recent edit from Chinese authorities. Last week, ten Chinese government agencies banned foreign 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 that China has ‘banned’ crypto several times in the past, this time there is no ambiguity,” said Henri Arslanian, leader and partner of PwC crypto. “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 banned, including any type 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. The overseas exchanges providing their services to Chinese residents, the statement pointed out as “illegal financial activity.”
Additionally, providing intermediary information and pricing services for virtual currency transactions is also illegal. This is the case for the financing of token issuance, virtual currency derivative transactions “and other business activities related to virtual currency”.
