Following the recent panic selloff that the crypto market experienced caused by the Chinese real estate giant Evergrand, another blow is the blanket ban on all crypto trading and mining. This has led to many crypto exchanges and cryptocurrency service providers severing ties with their clients on the Chinese mainland.
The Chinese government and the People's Bank of China have vowed to collectively root out what they call illegal cryptocurrency activities across the country. It also says overseas traders are not permitted to provide services to their investors on the mainland through the internet. Two of the largest crypto exchanges in China, Huobi Global and Binance, have stopped the registration of new clients coming from the mainland following the ban.
Du Jun, Huobi Global cofounder, while speaking to Reuters on Monday said this action was taken immediately as a corrective measure. Du did not give an estimate of the number of users that will be affected, but said that all other existing accounts with its mainland clients will be cleared out at the end of the year.
"On the very day we saw the notice, we started to take corrective measures," Du said.
More so, Binance has also banned the registration of new users with Chinese phone numbers. A spokesperson from Binance in a conversation with Bloomberg said that it does not operate in China and that all IP addresses from China will be blocked. This is in compliance with the company's commitment to following local rules and laws wherever they operate.
“Binance takes its compliance obligations extremely seriously and is committed to following local regulations wherever we operate,” he said.
Token pocket, a crypto wallet service provider, also announced that in order not to violate Chinese policies on cryptocurrency, it will terminate its services to its mainland clients. It also added that it will actively embrace regulation and its arms are open to corporations from China in blockchain technologies.
China has been the world's largest mining and trading centre for cryptocurrency but the recent clampdown on crypto mining in May has made the Chinese ecosystem difficult for digital currency firms to thrive.
Babel Finance, a Chinese crypto financial service provider has recently opened new business headquarters in Singapore and cobo, a crypto asset management custodian platform has also moved its headquarters to Singapore from Beijing.
As noted by Collin Wu, a Chinese cryptocurrency journalist, this ban may be of benefit to Decentralised Finance as Defi application platforms such as Metamask and DEX have seen a huge turnout recently from China owing to the recent restrictions
“Huobi, TP, etc. stopped supporting services for Chinese users. Although it is more of a statement than an action, many people are still transferring their coins to MetaMask and DEX,” Wu said..
The Friday restriction has nonetheless caused a little drop in the Bitcoin price; the founder and CEO of Babel finance stated that the effect of the recent ban policy will be "limited". However, its current price as at the time of writing is $43,754.
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