Leading crypto exchange to stop serving Chinese mainland users at year-end
Published: Sep 26, 2021 08:08 PM
Bitcoin, a type of cryptocurrency Illustration: VCG

Bitcoin, a type of cryptocurrency Illustration: VCG

Following China's broader ban on crypto trading and mining, some leading crypto exchanges with large user bases in the Chinese mainland, such as Huobi, have suspended new user registrations in the mainland and plan to leave the market entirely by year-end.

Binance reportedly halted new registrations from mainland users. Huobi Global announced on Sunday that in line with the government's regulatory policy, it will finish de-registering users whose personal identifications show them as mainland residents at the end of 2021, on the basis that users' capital security is guaranteed. 

The actions of two of the world's largest Bitcoin exchanges came after the People's Bank of China (PBC), the country's central bank, ruled all crypto transactions illegal in China on Friday. 

Beijing banned Bitcoin mining and exchanges in earlier stages of the crackdown on crypto-currencies. But the new move has expanded to prohibit all related activities, including order matching, token issuance and virtual currency conversion - which hit the market hardest.

It is also the first time that 10 government departments, including the National Development and Reform Commission (NDRC), the Ministry of Industry and Information Technology and the Ministry of Public Security, jointly listed crypto-currency mining as a sector to be eliminated.

"It shows the PBC's unwavering determination to ban all crypto-currencies to protect the sovereign currency, the yuan, and cut China's financial system off from the crypto market to fend off financial risks," an industry insider told the Global Times on condition of anonymity on Sunday.

The Global Times reported earlier that 90 percent of China's Bitcoin mining capacity was estimated to be shut down amid an intensified crackdown on crypto-currency mining. But some small-scale mining projects bounced back in September. The new rule also aims to close such loopholes.

As Chinese investors flee the crypto market and sell off digital assets, the exchange rate of the USDT - the benchmark stable crypto-currency anchored to the US dollar through which investors could convert fiat currency into digital currency and vice versa - against the yuan slumped to about 6.2 yuan on Sunday, far below the 6.5 quota yuan rate versus the greenback, fueling widespread panic across the market. 

As existing Chinese crypto investors scramble to withdraw, it is unlikely there will be a massive increase of Chinese investors in the future, as doors to access the speculative market have been completely shut down, Shentu Qingchun, CEO of Shenzhen-based blockchain company BankLedger, told the Global Times on Sunday. 

Chinese investors now account for roughly 10 percent of the world's Bitcoin buyers, according to industry insiders. The price of Bitcoin fell 0.5 percent on Sunday, dropping to $42,000.