|From: Glenn Petersen||9/27/2021 12:07:24 PM|
|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 firstname.lastname@example.org
Cryptocurrency Exchanges Curb Trading From China After Beijing’s Warning - WSJ
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|From: Glenn Petersen||9/28/2021 3:44:12 PM|
|How China’s Crypto Crackdown Could Backfire On Beijing|
Tomio Geron and Benjamin Pimentel
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|
|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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