How China’s cryptocurrency ban spreads overseas
Bitcoin prices have risen despite the lockdown of one of the largest markets, as the Chinese government declared all cryptocurrency transactions illegal last week and banned citizens from working for crypto companies. low.
Big Chinese crypto miners like Bitcoin and Ethereum will take powerful and power-hungry servers overseas, experts say. Many Chinese startups involved in digital currency exchange and commerce are also expected to rebase overseas after removing domestic customers from the list.
This change highlights how cryptocurrencies can bypass government regulations.
“The exchange is growing overseas anyway, the exchange business needs cloud infrastructure, it needs developers, it needs control to get things done in the right direction, that’s So is Taipei, whether it’s San Francisco, Singapore or Shanghai, it doesn’t really. matter. These companies are very virtual, “said Zennon Kapron, founder of the Singapore-based financial consultancy Kapronasia. .
“The real impact that we’ve probably seen is with minors and most of them. [are in] The process of moving abroad or [have] The move abroad has already been completed. “
The most powerful anti-crypt action ever
On September 24, Beijing’s financial authority, the People’s Bank of China, released a statement that cryptocurrencies do not have the status of other financial products. Advisories published in conjunction with nine other government agencies, including the Ministry of Public Security, state all affected businesses are illegal and warn that cryptocurrency transactions that occur outside of China will also be treated as a crime. . low.
China’s state-run news agency Xinhua explained the ban on Friday, saying it disrupted the financial system of crypto-controlled economies and contributed to crimes such as money laundering.
Cryptocurrencies – tools of digital commerce that are unrelated to central banking authorities – first appeared in China around 2008. Banks in China began banning the use of digital currencies in 2013 and stepped up regulations since 2016.
According to the news site, China was the world’s largest Bitcoin miner and supported the largest exchange by volume. CryptoVantage.. Many of the people who suddenly made millions of dollars when the price of Bitcoin soared four years ago are said to be in China.
Chinese miners and traders on their way to Singapore
The China ban imposes sanctions on international exchanges that do business with people in China, and reports show that international crypto exchanges have recently been trying to sever relationships with Chinese customers. .. However, the company itself remains largely silent.
A spokesperson for the Coinbase cryptocurrency exchange said Wednesday that “there is nothing to share at this time” on the crackdown in China. Worldcoin Global, a new type of cryptocurrency based in the United States, did not respond to requests for comment.
The increasing pressure on Chinese cryptocurrencies over the past few years has driven stakeholders away from the country, said Capron, the country’s first cryptocurrency peer-to-peer lending startup, a small link between lenders. individuals and borrowers. In China, he added, less than a quarter of the company remains.
As the Chinese retreat from the market, digital currency mining (the process of using a computer to distribute Bitcoin and verify cryptocurrency transactions in exchange for payments) is expected to become easier overseas, said Capron. paddy field.
He added that small businesses can be easier to operate without competing with large Chinese companies.
Singapore is imminent as a major and reliable location for operations that do not require a physical presence on land. The country accepted around 300 cryptocurrency license applications in July. According to Asian reports, e-commerce giant Alibaba and digital financial firms Yillion Group and Hande Group applied from China.
Jason Sue, vice president of Taiwan FinTech Association Industry Group, said other Asian countries do not have Singapore’s expanded legal welcome mat.
“Where is this money going? I think that’s a question that needs to be answered, ”Sue said. “In Asia, I think Singapore will be their destination. Singapore clearly has the clearest regulations and wants to attract more digital fintech. [financial-technology] Society. “
Outside Asia, Amsterdam and Frankfurt “have established their footsteps as international centers” for financial technology, said Rajiv Biswas, chief economist for the Asia-Pacific region at market research firm IHS Markit. Financial technology covers cryptocurrencies.
Western Europe was ranked this year as the world’s largest crypto economy, with more than $ 1,000 billion, or over 25% of global trade, activity, news and data services, a said Chainalysis. The rise of Europe follows similar rapid growth in 2020.
The definitive resurgence of crypto in China?
Chinese authorities are now targeting cryptocurrencies as part of a “wider nocturnal crackdown on wealth” and to “cleanse the wild west from nature,” the mainly regulated Sue said. The market sectors mentioned that did not. He predicts that trade has sunk underground for now and that China will eventually announce official digital currencies issued by the big banks.
Some countries are considering adopting new digital currencies that allow people to exchange money without the intervention of banks or others. Proponents argue that these currencies can take advantage of cryptocurrencies that facilitate the exchange of money without price fluctuations in decentralized digital assets such as Bitcoin.
Song Seng Wun, economist in the private banking division of Malaysian bank CIMB, said Chinese authorities may finally adopt a more tolerant view of digital currencies without a state license. He added that blockchain, the core technology behind public business records that make crypto trading transparent, could continue to be developed in China for other purposes.