China continues to put the clamps on cryptocurrency exchanges, resulting in multiple exchanges shutting down.
A few weeks back, Chinese President Xi Jinping gave a speech promoting blockchain. Many took that as a sign of approval for cryptocurrency as well, but it appears that such a sentiment is misplaced. The communist government is continuing to put the screws on domestic trading, with the result in several cryptocurrency exchanges making the decision to shut down.
Domestic Business Blues
The actions by Chinese authorities have led to five cryptocurrency exchanges closing down. Both Bitsoda and Akdex said they were terminating their service. Idax will continue to operate but will only focus on non-Chinese users. Likewise, Btuex announced they are shutting down due to the government’s actions but will reopen to offer their services to foreign users. Biss has shut down while it cooperates with a government probe.
Katie Talati, head of research at Arca, notes:
It appears that, like everything else within their borders, China feels it needs to have tighter controls on the crypto market including exchanges, miners, and asset issuers. I do believe, however, they are moving in a similar direction as Japan and other jurisdictions that have tight and clear regulations for crypto businesses.
China Seeks Full Control via Regulation
The country’s central bank warned investors to be leery of cryptocurrencies earlier this week, as well as telling businesses in the crypto ecosystem to correct any improper actions. The bank also told investors not to confuse blockchain technology with cryptocurrencies.
The reason for such warnings is that the bank, and the government of China, wants to curtail any volatility and excess of crypto trading and speculation. ICOs have long been banned in China, and the country’s Twitter-like social media platform, Weibo, recently closed down the accounts of Binance and Tron.
Crypto holders in China are unable to buy crypto with fiat on domestic exchanges, but they were still able to trade one form of cryptocurrency for another. Not it seems that even this activity is being clamped down on.
There is speculation that the dip in Bitcoin price recently is due to China’s actions. Bloomberg notes that 20 of the top 50 exchanges are located in the Asia-Pacific region, and those exchanges accounted for a full 40% of all Bitcoin transactions in the first half of the year.
Such moves are making Chinese crypto investors nervous. Wallet app Imtoken reported a 100% increase in Tether transactions after the most recent warning issued by China’s central bank.
From the government’s perspective, putting the clamps on decentralized cryptocurrency fits in with their goal of control. The country’s social media system is already set up to punish behavior that is deemed contrary to the wishes of the state, and the People’s Bank of China is reportedly close to issuing its own cryptocurrency. The Chinese people will eventually be able to get their hands on cryptocurrency again, but the crypto will take the form and function that the Chinese government wants.
Images courtesy of Pexels, Wikimedia, and Shutterstock.