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   Strategies & Market TrendsBlockchain and Cryptocurrencies


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To: w0z who wrote (3786)9/26/2021 5:18:48 PM
From: Glenn Petersen
   of 4176
 
While China's unhappiness with crypto is old news, it would seem that they are turning the crew a bit tighter.

Lesperance said the move is an attempt to freeze crypto assets so that holders can’t legally do anything with them. “Along with not being able to do anything with an extremely volatile asset, my suspicion is that like with Roosevelt and gold, the Chinese government will ‘offer’ them in the future to convert it to e-yuan at a fixed market price,” he said of President Franklin Roosevelt’s policy around the private ownership of gold, which was later repealed.

“I have been predicting this for a while as part of the Chinese government’s moves to close out all potential competition to the incoming digital yuan,” said Lesperance.

China- and Hong Kong-based bitcoin holders scrambling to protect their crypto assets


PUBLISHED FRI, SEP 24 202111:44 AM EDT
UPDATED FRI, SEP 24 202112:46 PM EDT
MacKenzie Sigalos @KENZIESIGALOS
CNBC.com

KEY POINTS

-- Some crypto holders in China and Hong Kong are scrambling to find a way to safeguard their digital currencies, according to an attorney who works with overseas clients to protect their crypto wealth.

-- This comes after the People’s Bank of China said in a Q&A posted to its website that all cryptocurrency-related transactions in China are illegal, including services provided by offshore exchanges.

Some crypto holders in China and Hong Kong are scrambling to find a way to safeguard their bitcoin and other tokens after China’s central bank published a new document Friday spelling out tougher measures in its wider crypto crackdown, including souped-up systems to monitor crypto-related transactions.

Bitcoin was down as much as 6% and ether sunk as much as 10%, amid a wider sell-off early Friday, as investors digested the news.

“Since the announcement less than two hours ago, I have already received over a dozen messages – email, phone and encrypted app – from Chinese crypto holders looking for solutions on how to access and protect their crypto holdings in foreign exchanges and cold wallets,” David Lesperance, a Toronto-based attorney who specializes in relocating wealthy crypto holders to other countries to save on taxes, told CNBC early Friday.

Lesperance said the move is an attempt to freeze crypto assets so that holders can’t legally do anything with them. “Along with not being able to do anything with an extremely volatile asset, my suspicion is that like with Roosevelt and gold, the Chinese government will ‘offer’ them in the future to convert it to e-yuan at a fixed market price,” he said of President Franklin Roosevelt’s policy around the private ownership of gold, which was later repealed.

“I have been predicting this for a while as part of the Chinese government’s moves to close out all potential competition to the incoming digital yuan,” said Lesperance.


The People’s Bank of China said on its website Friday that all cryptocurrency-related transactions in China are illegal, including services provided by offshore exchanges. Services offering trades, order matching, token issuance and derivatives for virtual currencies are all strictly prohibited, according to the PBOC.

The directive will take aim at over-the-counter platforms like OKEx, which allows users in China to exchange fiat currencies for crypto tokens. An OKEx spokesperson told CNBC the company is looking into the news and will let CNBC know once it has decided on the next steps.

Lesperance claims some of his clients are also worried about their safety.

“They are concerned about themselves personally, as they suspect that the Chinese government is well aware of their prior crypto activities, and they do not want to become the next Jack Ma, like ‘common prosperity’ target,” said Lesperance, who has helped clients to expatriate in order to avoid taxes, amid a rising crypto crackdown in the U.S.

That said, it’s common for the authoritarian state to lash out against digital currencies.

In 2013, the country ordered third-party payment providers to stop using bitcoin. Chinese authorities put a stop to token sales in 2017 and pledged to continue to target crypto exchanges in 2019. And earlier this year, China’s takedown of its crypto mining industry led to half the global bitcoin network going dark for a few months.

“Today’s notice isn’t exactly new, and it isn’t a change in policy,” said Boaz Sobrado, a London-based fintech data analyst.

But this time, the crypto announcement involves 10 agencies, including key departments such as the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security, in a show of greater unity among the country’s top brass. The State Administration of Foreign Exchange also participated, which could be a sign that enforcement in this space might increase.

Signs of coordination

There are other signs of early government coordination in China. The PBOC document was first announced Sept. 15, and a document banning all crypto mining by China’s National Development and Reform Commission was released Sept. 3. Both were published on official government platforms on Friday, suggesting a collaboration between all participating agencies.

And unlike past government statements that refer to cryptos under the same umbrella language, this document specifically calls out bitcoin, ethereum and tether, as stablecoins begin to enter the lexicon of regulators in China.

Bespoke Growth Partners CEO Mark Peikin thinks that this is the start of widespread, near-term pressure on the price of bitcoin and other cryptocurrencies and that “the risks facing Chinese investors will have a significant spillover effect, leading to an immediate risk-off trade in the U.S. crypto market.”

“Chinese investors, many of whom continued to turn a cold shoulder to the Chinese government’s latest and largest crackdown on cryptocurrency trading the last several months, may no longer remain bellicose,” Peikin told CNBC.

“Chinese investors thus far largely skirted the ban by decoupling transactions – using domestic OTC platforms or increasingly of late, offshore outlets, to reach agreement on trade price, and then using banks or fintech platforms to transfer yuan in settlement,” Peikin said.

But given the PBOC has improved its capabilities to monitor crypto transactions – and the recent order that fintech companies, including the Ant Group, not provide crypto-related services – Peikin said this workaround used by Chinese investors will become a progressively narrow tunnel.

Friday’s statement from the PBOC adds to other news out of China this week, which has roiled crypto markets. A liquidity crisis at property developer Evergrande raised concerns over a growing property bubble in China. That fear rippled across the global economy, sending the price of many cryptocurrencies into the red.

However, not all are convinced this downward pressure on the crypto market will last.

Sobrado thinks the market is overreacting to Friday’s announcement from the PBOC, given that a lot of the exchange volume in China is decentralized and conducted peer-to-peer – increasingly the most telling metric of crypto adoption. While exchanging tokens P2P doesn’t evade regulatory scrutiny, Sobrado said those crypto exchanges are harder to track down.

Lesperance also points out that Friday’s news might actually strengthen the business case for cryptos as an asset class, given they are a hedge against sovereign risk.

Ultimately, the biggest question is whether this latest directive from Beijing has teeth. “The running joke in crypto is that China has banned crypto hundreds of times,” Sobrado said. “I’d be willing to wager people will be trading bitcoin in China a year from now.”

China, Hong Kong bitcoin holders scramble to protect their crypto assets (cnbc.com)

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From: Glenn Petersen9/27/2021 12:07:24 PM
   of 4176
 
Cryptocurrency Exchanges Curb Trading From China After Beijing’s Warning

Huobi Global said it stopped allowing new customers in mainland China to register accounts

By Elaine Yu
Wall Street Journal
Sept. 27, 2021 6:41 am ET

HONG KONG—One of the world’s largest cryptocurrency exchanges said it would close all user accounts in mainland China by the end of the year, days after the country’s central bank declared all crypto-related transactions illegal.

Huobi Global, which was founded in 2013 and currently operates from offices in Singapore, South Korea, the U.S. and other countries, over the weekend said it stopped allowing new customers in mainland China to register accounts. The exchange will also gradually retire existing accounts in China by the end of 2021 to ensure the safety of its customers’ assets, it added.

Another big cryptocurrency exchange, Binance, said Monday that it recently started blocking account registrations using China cellular phone numbers.

Like Huobi, Binance was also originally founded in China. Both firms had been facilitating so-called peer-to-peer transactions by matching people who wanted to buy and sell cryptocurrencies using the yuan.

Beijing has regularly moved to rein in crypto-related activities, including by banning exchanges from operating within its borders since 2017 and more recently cracking down on crypto mining and forcing companies to shift their computers elsewhere. But individuals in the country have continued to find ways to trade bitcoin and other digital currencies, often via transactions facilitated by platforms operating offshore.

In a move targeting such platforms, the People’s Bank of China this month said it is illegal for overseas exchanges to serve residents in China through the internet. The regulator also warned that the firms’ employees based in mainland China would be investigated if they continued to advertise or offer crypto-related services.

The price of bitcoin dropped after the Chinese regulator’s notice on banning crypto-related transactions was published Friday. On Monday, bitcoin was trading at $43,490, according to CoinDesk, after recouping some recent losses.

Du Jun, a co-founder of Huobi, said in a statement that an unspecified portion of the exchange’s users are in mainland China, adding that the account closures would have a short-term impact on revenue. He added that nearly 70% of the group’s global business originates from other countries and that proportion is “steadily increasing.”

Mr. Du didn’t reference Chinese regulators’ toughened stance on the industry. He said Huobi has legal business licenses in multiple jurisdictions and “will double down on our compliance efforts and continue to build compliant operations on a global scale.”

Shares of Hong Kong-listed Huobi Technology Holdings Ltd. , a unit of Huobi Global that manufactures electronic products and operates a virtual-asset service platform, tumbled 21.5% on Monday.

On Monday, a Binance spokesperson said users in China haven’t been able to access its website since 2017 when it was blocked. The company also said its app isn’t available in China. Its peer-to-peer cryptocurrency trading service was launched in October 2019, according to a blog post by the company, which recently removed a reference to its services for the Chinese market.

FTX, a major crypto derivatives exchange that was based in Hong Kong, in recent days moved its headquarters to the Bahamas, an offshore tax haven.

Sam Bankman-Fried, FTX’s founder and chief executive, said on Twitter Saturday that the Bahamas is one of the few places with a “comprehensive framework” for cryptocurrencies.

“The Bahamas has emerged from Covid lively, safe, and without quarantine,” he added. It was an apparent contrast to the situation in Hong Kong, whose strict border controls and long quarantine requirements have drawn many complaints from the international business community.

“It is impractical to have a global business based out of a jurisdiction that we can’t easily take business trips from,” FTX said in a statement.

China’s tough stance on cryptocurrencies doesn’t directly apply to Hong Kong, which has been an active venue for the industry. But the city is considering its own rules, including by potentially limiting trading to professional investors—something FTX had already pre-emptively implemented.

Write to Elaine Yu at elaine.yu@wsj.com

Cryptocurrency Exchanges Curb Trading From China After Beijing’s Warning - WSJ

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From: longz9/28/2021 12:06:54 AM
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Cathie Wood's Ark Invest to create a bitcoin ETF under the symbol 'ARKB' (cnbc.com)

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From: longz9/28/2021 12:09:54 AM
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PayPal launches its ‘super app’ combining payments, savings, bill pay, crypto, shopping and more | TechCrunch

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From: longz9/28/2021 12:13:35 AM
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Fed Chair Powell to warn Congress that inflation pressures could last longer than expected (cnbc.com)

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From: longz9/28/2021 3:22:15 PM
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Peruvian stablecoin launches on Stellar blockchain (cointelegraph.com)

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From: longz9/28/2021 3:24:19 PM
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Bitcoin, Gold Under Pressure as Dollar Tracks US Treasury Yields Higher — CoinDesk

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From: longz9/28/2021 3:27:57 PM
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Facebook announces $50M investment fund tasked with developing its virtual metaverse (cointelegraph.com)

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From: Glenn Petersen9/28/2021 3:44:12 PM
2 Recommendations   of 4176
 
How China’s Crypto Crackdown Could Backfire On Beijing

Tomio Geron and Benjamin Pimentel
Protocol
September 28, 2021

China is run by a central committee, so it shouldn't be surprising that bitcoin and other decentralized digital currencies don't have many fans among the Politburo. The question is whether China's crypto crackdown risks going so far that it ends up popularizing crypto technologies that even the Great Firewall can't contain.

On Friday, China outlawed virtually any activities involving digital currencies, marking a crescendo in its fight against crypto. First there was the shutdown of crypto mining, then a ban on financial firms engaging in crypto transactions.

The crypto measures come as China moves to rein in Big Tech generally. And to the extent that crypto companies have a presence in the country, the crackdown is having an impact.

  • Exchanges Huobi and Binance as well as wallet provider TokenPocket are shutting off access to their services to new or existing users, according to Reuters.
  • Individuals who want to trade crypto in China will have to try to access overseas exchanges or use other methods such as peer-to-peer trading.

  • A smarter strategy for the government could be to co-opt crypto.
    Benefiting from blockchain innovations doesn't necessarily require engaging with the open internet.

  • Take NFTs: As Zeyi Yang reported for Protocol | China, NFT transactions are happening through private blockchains managed by companies and ultimately overseen by the government, or on public blockchains but filtered through a company's control.
  • China's digital yuan takes some inspiration from bitcoin, but it doesn't actually use a blockchain — instead, transactions will be kept on private databases more amenable to central government control.

  • But the risk to China is that innovation and capital will go elsewhere.
    That will mean a brain drain just as crypto-related industries like asset management are taking off elsewhere.

  • Crypto asset management firm Cobo just moved its headquarters from Beijing to Singapore.
  • Previous crackdowns in China resulted in outflows of capital from exchanges originating in China including Binance, Huobi and OKEx of $28.3 billion in the first half of 2021, a 62% increase, per Reuters.
  • "It's possible that the Chinese crypto market will be cut off from global innovation as companies avoid the market entirely," said Matthew Gould, founder and CEO at Unstoppable Domains.

  • If China loses, who benefits?
    Businesses that avoided China could look smart as they pick up more business. And ultimately, technologies that route around central government control could get more powerful.

  • Exchanges are a volume game. Binance, Huobi and OKEx still dominate the crypto industry, but a loss of Chinese customers could have some impact on their businesses.
  • Other countries are throwing down a welcome mat for crypto — see El Salvador's embrace of bitcoin as legal tender.
  • Then there's DeFi — self-running software programs for financial transactions that operate on blockchains and don't depend on a central intermediary. The crackdown only increases the attraction of protocols and apps that can't be abruptly shut down, said Ed DeLeon, founder and CEO of crypto company Anatha: "More than anything, this increases the utility and traffic of the entire DeFi ecosystem."

  • That's why China's crackdown may backfire on Beijing.
    When the music industry shut down Napster, file sharing didn't go away: It fractured into hundreds of programs and networks. China risks driving its crypto enthusiasts deeper into the DeFi camp, and unleashing their creativity on an ever-more decentralized financial infrastructure. In a speech proclaiming the People's Republic of China in 1949, Mao Zedong described the state system as a "weapon we must firmly grasp." But what if there's nothing to squeeze?

    — Tomio Geron

    How China’s crypto crackdown could boost DeFi - Protocol — The people, power and politics of tech

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    To: Glenn Petersen who wrote (3803)9/28/2021 4:01:17 PM
    From: Elroy
       of 4176
     
    Exchanges are a volume game. Binance, Huobi and OKEx still dominate the crypto industry, but a loss of Chinese customers could have some impact on their businesses.
    Then there's DeFi — self-running software programs for financial transactions that operate on blockchains and don't depend on a central intermediary.


    If DeFi works, and becomes inexpensive (I hear the fees are quite high now, but they should decline) then why do we need exchanges at all? DeFi seems likely to over time cause the end of exchanges, which fits in well with the blockchain concept of eliminate the rent seeking intermediary.

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