China Targets 124 Offshore Cryptocurrency Exchanges in Nationwide Clampdown
The Chinese government is taking additional measures to limit mainland investors’ access to offshore cryptocurrency exchanges. According to local media sources, hundreds of offshore exchanges are being targeted in an effort to stem cryptocurrency trading domestically.
China Broadens Clampdown
The Hong Kong-based South China Morning Post (SCMP) reported Thursday that the Leading Group of Internet Financial Risks Remediation – Beijing’s internet finance watchdog – will start banning the IP addresses of 124 offshore cryptocurrency exchanges that are still available to mainland investors. Additionally, authorities will continue to monitor domestic websites affiliated with cryptocurrency trading and initial coin offerings.
As SCMP reports, China recently shut down at least eight blockhain-focused online media outlets, some of which raised millions of dollars in venture capital. Last week, Beijing’s Chaoyang district issued a notice banning local venues from hosting events promoting digital currencies.
The People’s Bank of China (PBOC) last September pulled the plug on a once vibrant cryptocurrency industry by banning trades and initial coin offerings. Although PBOC cited fraud and consumer safety in its decision, the likely reason for the ban was to stem capital flight from the country. Since it first devalued the yuan back in August 2015, China has struggled to reverse capital outflows by investors seeking diversification away from the currency.
China and the Next Cryptocurrency Bull Market
As Hacked previously reported, China’s domestic clampdown on cryptocurrencies has not deterred wealthy investors from accessing the market. Case in point: Singapore has welcomed thousands of foundations set up by Chinese nationals to essentially trade digital currencies. According to Chen Xianhui, a Singapore agent helping Chinese investors set up foundations in the tiny city-state, most of the foundations being created are essentially token investment funds.
Despite banning crypto trades, China’s government is heavily active in the blockchain arena. It not only produces a monthly ranking of the top cryptocurrencies, the central bank has actually filed 41 blockchain-related patents over a 12-month period.
What’s more, China is home to some of the world’s largest blockchain companies. Its three biggest players – Bitmain, Canaan Creative and Ebang – have all announced plans to launch an initial public offering.
The author has speculated before that China’s ban on cryptocurrency reflects its overarching desire to control the market. The ban was also a way to appease old-guard Communists ahead of the 19th National Congress back in October. A likely outcome is that cryptocurrency trading will be eventually re-introduced on terms that are acceptable to Beijing. This ‘centralized decentralization’ narrative is consistent with China’s economic model, which promotes centralization with sweeping laissez-faire reforms.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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