Two of the world’s greatest crypto exchanges, Huobi Global and Binance, have halted new account registration of Chinese users. This follows the announcement by the People’s Bank of China that all crypto-related transactions will be considered illicit financial activity. Here’s what’s happening in China.
China announces crypto ban
On Friday 24, through the People’s Bank of China (PBOC) and nine other government agencies, China shared a statement to clarify that cryptocurrency transactions and mining are illegal. This is the country’s strongest stance against the non-government-issued currencies to date.
Furthermore, this latest announcement is the culmination of years of attempted crackdown on the rise of cryptocurrencies. This recent notice was targeted at offshore exchanges, popular with Chinese users.
Following the announcement, two key crypto exchanges, Binance and Huobi Global, have now said they’ll no longer allow new account creation in the country, with Huobi planning to close the existing accounts by the end of the year.
According to the Huobi statement, this move is to comply with the local laws and regulations, as well as ensure the safety of their users’ assets. The crypto exchange also plans to notify the users of the specific arrangements and details about account closure through official announcements, e-mails, or text messages.
While they are suspending operations in mainland China, new sign-ups will still be available for Hong Kong users on both platforms.
What is the history of crypto market regulation in China?
This directive is not the first one to be issued by the Chinese government. The country issued similar bans in 2013 and 2017. In 2017, China shut down its local cryptocurrency exchanges, which accounted for 90% of global bitcoin trading.
During this time, they also ordered exchanges to halt trades between fiat money and crypto tokens, which forced Huobi and Binance to set up shops in friendlier jurisdictions such as Singapore and Malta.
In May, China also banned financial institutions and payment companies from providing services related to cryptocurrency transactions. In addition, the cabinet called for a renewed clampdown on crypto mining and trading, which forced Huobi to ban existing customers from trading riskier products like derivatives.
What’s the impact?
Following the announcement, the largest cryptocurrency, Bitcoin, dropped by about 5%, while Ethereum fell by 8%. Ripple’s XRP dropped 7%. However, Chinese users could still register on the third major crypto exchange, OKEx, as of September 26.
This latest government clampdown on virtual currency will make it difficult for individuals to buy cryptocurrencies using various payment channels.
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