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( 26 Sep Bloomberg) -- Two of the world’s largest Bitcoin exchanges have halted new registrations for Chinese users and one will retire current accounts, taking actions to comply with Beijing’s latest crypto ban.
Exchange operators Huobi and Binance have stopped letting traders use mainland China mobile numbers to register new accounts, after the People’s Bank of China said Friday all crypto-related transactions will be considered illicit financial activity. New sign-ups are still available for Hong Kong users on both platforms, but mainland China is no longer an option for new-account creation. Huobi has also announced plans to close existing accounts by year-end.
“To comply with local laws and regulations, Huobi Global has ceased account registration for new users in Mainland China,” effective Sept. 24, the exchange said in a statement.
“Huobi Global will gradually retire existing Mainland China user accounts” by the end of December “and ensure the safety of users’ assets,” it said.
A Binance spokesperson said the company doesn’t have exchange operations in China and blocks Chinese IPs, without commenting on the mobile registration move.
“Binance takes its compliance obligations very seriously and is committed to following local regulator requirements wherever we operate,” the spokesperson said in an email.
China’s latest pronouncement -- issued by the central bank along with nine other government agencies including the public security ministry -- is the culmination of years of attempted crackdowns on the rise of Bitcoin and its peers. Friday’s notice specifically called out offshore exchanges targeting Chinese users, banning them from hiring locally for roles from marketing to payment settlement and tech.
In 2017, China told local exchanges to stop hosting trades between fiat money and crypto tokens, forcing Huobi and Binance to set up shops in friendlier jurisdictions such as Singapore and Malta for their main trading platforms. Still, Chinese users have been able to access their services including over-the-counter trading and crypto-to-crypto transactions.
In June, Huobi banned existing Chinese users from trading riskier products such as derivatives, after China’s cabinet called for a renewed clampdown on crypto trading and mining.
There is no indication that Chinese users are barred from Huobi and Binance altogether, which are widely regarded as two of the big three crypto exchanges that originated in China, along with OKEx.
Users can still use mainland China numbers to register on OKEx as of Sunday morning in Hong Kong.
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(Bloomberg) -- Chinese officials have taken steps for months to crack down on cryptocurrencies, with mixed effects. On Friday, they tried to erase any doubts about their intentions.
In statements that were the most extreme and unequivocal so far, authorities on Sept. 24 said crypto transactions in China are banned and they will root out mining of digital assets.
Almost immediately, the popular offshore exchange Huobi stopped allowing new users to register with a mainland China phone number and in a statement Sunday said it would “gradually retire existing mainland China user accounts” by Dec. 31.
“While this is not a surprise as China has ‘banned’ crypto many times in the past, this time there is no ambiguity,” said Henri Arslanian, PwC crypto leader and partner, on Twitter.
“Crypto transactions and crypto services of all kind are banned in China. No room for discussion. No gray area.”
The People’s Bank of China issued its Friday missive along with nine other institutions, including the supreme court, the police and the internet and securities watchdogs, a signal that enforcement may come from all corners. It also closed the longstanding loophole that enabled citizens to maintain accounts with offshore exchanges such as Huobi, and forbid the platforms to hire locally for roles like marketing, tech and payment, limiting their ability to serve Chinese customers.
Regulators also specified that the stablecoin Tether, along with Bitcoin, Ether and other cryptocurrencies, is not fiat currency. It’s a new recognition of the role that stablecoins play in crypto-to-crypto trading, and a sign that regulators are newly interested in that activity, even though it may not affect the yuan directly.
Bitcoin fell by as much as 8.9% on Friday to about $40,700 but stayed within its recent trading range and recovered some of the immediate losses over the weekend. Some crypto boosters noted that earlier attempts to ban cryptocurrencies have often preceded gains in Bitcoin.
China’s top economic-planning agency asked local officials to investigate abnormal power usage, call in loans and eliminate preferential tax treatment to speed the shutdown of mining operations.
Many miners have already moved out of China, which had a 46% share of the global hash rate, a measure of the computing power used in mining and processing, as of April, according to the Cambridge Bitcoin Electricity Consumption Index.
Since the crackdowns began, the hash rate dropped by more than half from a mid-May peak through early July, according to Blockchain.com data. Its recovery indicates that miners have come back, whether inside China or elsewhere. In the immediate aftermath of the Friday announcement, the hash rate stayed fairly steady.
As owning crypto has yet to be made illegal the way possessing drugs are, Bobby Lee, founder of crypto storage provider Ballet, said it remains to be seen if the latest rules will be more effective than the last, or what it means for people who own such assets.
“PBOC did clearly state this time that personal transactions would no longer be offered legal protection status,” Lee said. “Meaning if there are disputes or fraud, victims of personal transactions can no longer bring a legal case.”
Courts in China have previously recognized crypto as property, but PwC’s Arslanian wondered if that will change.
Huobi customers will have to establish accounts elsewhere before the end of the year, which may become more difficult if other exchanges follow Huobi and Binance, which also doesn’t allow users to create accounts with mainland numbers.
In a post on Twitter, Arslanian said it’s worth watching how far China’s crypto users go to circumvent the new restrictions. It will be difficult to shut down access to DeFi platforms, stop peer-to-peer trading of Bitcoin or prevent residents from buying crypto while overseas, he said. |
