Five Chinese Crypto Exchanges Succumb To Regulatory Clampdown
- Crypto exchanges either shutting down or won’t serve domestic users
- Traders spurred to transfer their money to safer places.
- Tether, a popular stablecoin for Chinese investors meanwhile recording a surge in transactions
China’s latest crackdown on the crypto industry has caused at least five of the local exchanges to shut down their operations or they will no longer cater to domestic users this month.
After President Xi Jinping publicly promoted blockchain technology creating a market frenzy that has the Chinese regulators stepping up their scrutiny.
A couple of weeks back, Binance and Tron’s Weibo account was suspended. The Chinese central bank then issued a notice asking the local government to shut down such businesses. The regulator also warned against illegal exchange operations.
Shenzhen financial regulator released a statement last week where it talked about organizing check-ups. The central bank’s Shanghai branch also said that companies that have offered services to offshore crypto exchange and conducted publicity campaigns have been ordered to take corrective actions immediately or exit altogether.
After the initial crackdown in 2017, this latest shutdown is the biggest cleanup by the Chinese authorities.
Crypto trading has been already banned but trading had been ramping through over-the-counter (OTC) platforms. But now even those have succumbed to regulators.
Tighter Control Spurs traders to move Money to Safer Places
According to Chainalsysis, twenty of the top fifty crypto exchanges are based in the Asia Pacific region and the first half of the year they accounted for 40% of all bitcoin transactions.
This month Chinese exchange operator Biss announced the termination of its services while last week Akdex and Bitsoda halted their operations. Idax said it would shut down in response to Chinese government orders, its focus now would be on overseas users. And on Monday, Btuex said it would no longer serve users in China but could reopen in the future to serve only overseas users. Katie Talati, head of research at Arca said,
“It appears that, like everything else within their borders, China feels it needs to have tighter controls on the crypto market including exchanges, miners and asset issuers,”
“I do believe, however, they are moving in a similar direction as Japan and other jurisdictions that have tight and clear regulations for crypto businesses.”
These uncertainties, however, have spurred the traders to transfer their money to safer places.
Aaron Hu, a 26-year-old computer engineer in China told Bloomberg that he moved all his crypto holdings from exchanges like OKEx and Binance to his own wallet, saying, “The first thing I thought of is how to secure my assets.”
Tether, a popular stablecoin for Chinese investors to move into and out of cryptos, saw an uptick in its transactions. On Nov. 22, the day the central bank issues its warning against crypto trading, crypto wallet app ImToken saw its transactions surging to $66 million, more than double its average daily Tether transactions in the previous month.