China Government Freezes International Exchanges

China Government Freezes International Exchanges

February 5, 2018 0 By FaletiAbiodun

The Chinese government has set out to scour the internet for any chance at trading cryptocurrencies, whether it is exchanges or peer-to-peer marketplaces.

The shutdown of local exchanges in September was not enough, as many of them opened branches off the mainland and moved to neighboring countries. Others migrated to Local Bitcoins to be able to trade.

“To prevent financial risks, China will step up measures to remove any onshore or offshore platforms related to virtual currency trading or ICOs,” wrote the Chinese publication Financial News, an edition affiliated to the People’s Bank of China central regulator.

The news of China’s ban coincided with another downward turn on the market, as currencies wiped out up to 20% of their value overnight. But it is unknown if the measures have a direct effect, or if the drop is related to other factors, such as inertia, or overselling, and a coming bear market.

Strangely, no news of the bans or restrictions have come from Huobi, or OKEx. Exchanges themselves have not moved in to restrict Chinese buyers yet, with the exception of Binance, who offered to refund a part ICO backers from China in September.

Yet official Chinese trading has been at a virtual zero for months, while Japanese exchanges are growing. Recently, Huobi stated it would open a branch in the USA, where demand for crypto remains strong.

The move of China to ban exchanges and ICOs is somehow inconsistent, given that projects like NEO are enjoying the support of the government, at least in the idea stage. And Chinese projects continue to be created, as the NEO platform expects an increase in ICOs in 2018.

China will check crypto buying, since it has been an asset and a tool to circumvent capital restrictions. In addition, regulators consider it a personal finance risk, and seek to protect investors.

“It is common for people to use VPNs [virtual private networks] to trade cryptocurrencies, as many exchange platforms relocated to Japan or Singapore,” said Donald Zhao, Bitcoin investor.

China has been known to also run a years-long crackdown on business related to circumventing the Great Firewall of China, which now also bans cryptocurrency-related sites. In the future, any business tangentially related to cryptocurrency may be targeted. China now bans ads related to ICOs or cryptocurrencies, echoing the Facebook ad ban.

Ambitious projects for the Chinese market, like TRON (TRX) have taken a beating, sliding to $0.3, the price before the most dramatic December spike. Bitcoin (BTC) continued to slide after the news, to $7,732.92.