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Why Cryptocurrency Exchanges Are Cutting Ties With Chinese Users

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Cryptocurrency exchanges and other crypto services providers are rushing to cut business ties with mainland Chinese customers after Beijing issued a ban on all crypto transactions, trading and mining last Friday.

In a build-up of years of efforts to crack down on the sector, ten powerful Chinese government bodies and the central bank said foreign exchanges were barred from offering services to Chinese investors, which was a previously grey area. They also vowed to eradicate “illegal” cryptocurrency activities jointly.

Huobi Global and Binance, the two world’s largest exchanges popular among Chinese users, have halted new registrations by mainland users. Huobi also announced it would clean up existing accounts by the end of this year.

Huobi Takes Immediate Action

Du Jun, Huobi Group co-founder, in a statement to Reuters, said that on the day they saw the notice, Huobi started to take corrective action. However, Du did not disclose how many users would be affected.

On Monday, shares in crypto firms dropped, with trading firm Huobi Tech (1611.HK) dropping by 23%. OKG Technology Holdings Ltd (1499.HK), a fintech firm majority-owned by Xu Mingxing, lost 12%.

TokenPocket, a major crypto wallets provider, announced to its clients that it would terminate services offered to mainland Chinese clients that violate Chinese policies and would “actively embrace” the enforced crypto regulation. The firm also added that it welcomes future collaboration from China in blockchain technologies.

Many Chinese based crypto exchanges have shut down or moved abroad since 2017. This was after China, once the world’s largest bitcoin mining and trading centre, banned the exchanges from converting legal tender into crypto and vice versa.

Amid this crackdown, many other Chinese crypto companies have moved out of China in the past few months, according to Flex Yang, founder and CEO of Babel Finance. However, he added that the impact of the latest regulations would be limited. The Chinese crypto services provider opened its new headquarters in Singapore this month.

Cobo, a crypto asset management platform, also recently relocated its headquarters from China to Singapore.

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Wilfred (founder of CryptocurrencyIsh) is a content marketing professional and cryptocurrency enthusiast. He believes that cryptocurrencies and blockchain technology hold the key to the future. His main interest is in altcoins and NFTs. When he is not writing cryptocurrency news, he enjoys writing about travel topics.