At least five Chinese cryptocurrency exchanges have halted or chosen to terminate operations this month in response to a perceived redoubling of Beijing’s anti-crypto stance.
Also on Nov. 24, Idax cited Chinese government policy as the basis for its decision to prevent domestic clients from using its service.
Likewise, with explicit reference to government policy, Btuex revealed on Nov. 25 that it would halt services immediately and reopen in the future for an overseas-only clientele.
On Nov. 4, crypto exchange Biss had announced it was “actively cooperating” with investigations into its operations and planned to resume services as soon as possible.
Since then, it has been reported that authorities had arrested 10 suspects connected with the exchange. While information surrounding the arrests remains piecemeal, reports claim that regulatory authorities found Biss’ services to be in violation of Chinese capital controls.
Blockchain, not Bitcoin
With exchanges and operators falling into line, Bloomberg has this week published a report claiming that these recent developments represent “the biggest cleanup of the sector” since Beijing’s historic rout in Sept. 2017.
Citing data from blockchain intelligence firm Chainalysis, Bloomberg’s report notes that 20 of the top 50 global crypto exchanges are based in the Asia-Pacific region, accounting for an estimated 40% of Bitcoin transactions in the first half of 2019. Within Asia-Pacific, Chainalysis’ data indicates that the lion’s share of exchanges are based in China.
Beijing’s reaffirmation of its hardline stance has been interpreted as a bid to prevent what it perceives to be the speculative excesses associated with crypto trading, which it purportedly fears could increase following a major public endorsement of blockchain by President Xi Jinping in October. State media has since cautioned the public to remain “rational.”
Clarity or clampdown?
Katie Talati, head of research at Los Angeles-based asset manager Arca, told reporters:
“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.”
Talati nonetheless argued that Beijing’s position is evolving in a similar direction to that of Japan, where “tight and clear regulations for crypto businesses” are being established.
Local traders appear nervous nonetheless: as Bloomberg notes, wallet app Imtoken reported a twofold increase in Tether (USDT) transactions among its 10 million users on Nov. 22, purportedly in response to fresh warnings from Chinese regulators. USDT is commonly used as a vehicle to move between digital and fiat currencies.
Binance’s official account on major Chinese microblogging website Weibo was suspended in mid-November, as well as that of the Tron Foundation — the development organization behind the 11th biggest cryptocurrency Tron (TRX).
As Cointelegraph reported, crypto exchange IDAX has today suspended deposits and withdrawals generally after its CEO allegedly disappeared.
In the wake of its announcement it would cease to serve Chinese users, the platform had earlier this week warned it was seeing a run on withdrawals. It has now further revealed that the whereabouts of IDAX Global CEO Lei Guorong are unknown and that it has — as a precautionary measure — locked-down its cold storage wallet to protect user funds.