Last week, the People’s Bank of China resounded its stance on cryptocurrencies declaring every operation/transaction related to cryptocurrency illegal and banned within the shores of the country. Following the Friday declaration on cryptocurrencies, exchange platforms have begun to ban Chinese users from accessing their platforms. The ban did not exclude exchange platforms based in other countries; they are also to stop providing cryptocurrency-related services to users in China.
Binance, one of the biggest exchange platforms in the world, has blocked Chinese users from accessing its platform. According to the exchange, account registrations using Chinese mobile phone numbers have been blocked and the Binance app has been taken down from stores in China. A Binance spokesperson said that “Binance takes its compliance obligations very seriously and is committed to following local regulator’s requirements wherever we operate”.
China’s animosity towards cryptocurrency isn’t new. Back in 2017, the country closed down local cryptocurrency exchanges. It also went as far as banning what was termed initial coin offering (ICOs), a proposed IPO for cryptocurrency which will help cryptocurrency companies raise funds by issuing their digital currencies. The country’s fear has always been centred around how allowing cryptocurrency to thrive would be detrimental to its financial stability. Other minor concerns include the mining processes of these cryptocurrencies takes a toll on the country’s resources.
The crackdown actions have usually been targeted towards mining and trading operations but these new rounds are targeted towards cryptocurrency companies still providing cryptocurrency services to Chinese users.
The crackdown action against miners, which was at its peak months ago, pushed miners out of the country. Many of them had to move their operations to other favourable countries. During this dreaded period, more than $300 billion worth of cryptocurrencies was lost.
Apart from Binance, Huobi, another globally recognized exchange platform announced on Sunday that it had stopped registering new accounts for mainland Chinese users. It also mentioned that it will eventually stop the accounts of already existing users from being active on the 31st of December, 2021.
With the new crackdown actions, China aims to close the existing loopholes that have enabled Chinese citizens to hold, store and trade cryptocurrencies.