The Chinese government is tightening up its crypto crackdown efforts even as Beijing continues to advocate for increased blockchain technology adoption. This fresh assault on cryptocurrency trading avenues has seen more platforms, including over-the-counter (OTC) desks forced to shutter their services.
Beijing’s renewed anti-crypto offensive also coincided with a period of significant price decline in the cryptocurrency market. Some commentators even remarked that the new anti-crypto push might have exerted downward pressure on the price action of both the bitcoin and altcoin markets.
Beijing Doubles Down on Crypto Trading Crackdown
China’s efforts to rid the country of bitcoin trading has intensified, according to a report by Bloomberg, 2019. The recent action of the Chinese government has caused five cryptocurrency exchanges to suspend or cease their activities in the country.
The exchanges which have shuttered their services in the ongoing “cleanup” include Bitsoda, Akdex, Bituex, and Biss. Most of the crypto exchanges are seeking to focus on international clients, while geofencing Chinese users.
In 2017, the government banned ICO trading in the country. While the ban is yet to be lifted, the government recently raided exchanges companies that were conducting crypto trading without permission.
Shenzhen authorities in China recently identified about 39 cryptocurrency exchanges that were conducting trading businesses illegally in the country. The city’s law enforcement agents carried out the raid in collaboration with some governmental bodies including the country’s central bank, the People’s Bank of China (PBoC).
Before the Shenzhen raid, there were reports that authorities in Shanghai also brought down the regulatory hammer on virtual currency exchanges. There were speculations that the Binance office in Shanghai was affected by the crackdown. However, CEO Changpeng Zhao came out to deny the rumors and stated that the platform had no office in the city of Shanghai.
The crackdown has also caused investors to move their funds to safety. Crypto wallet platform, ImToken, saw 10 million users carry out Tether (USDT) transactions worth $66 million, which is twice the daily volume that occurred in October.
While the situation may look damaging for the cryptocurrency landscape in China, TRON CEO, Justin Sun, said that the atmosphere for digital currency and blockchain technology could be positive in the long term.
OTC Desks Not Spared in Renewed China Offensive
Apart from clamping down on crypto trading, China has also come down hard on over-the-counter (OTC) desks. Following the ban in 2017, Chinese crypto users turned to OTC platforms to continue virtual currency trading. But that avenue may no longer be available as the government has also clamped down on the trading service.
China’s recent bulldoze of the crypto trading sector coincides with a significant drop in the price of bitcoin and other altcoins. Some members in the crypto community and other observers believe that any negative action on virtual currency that comes out of China negatively affects the price of digital currencies. Although there has been a slight recovery, prices are still at their lowest
China Advocates Blockchain Not Bitcoin
China may not be a fan of the crypto industry at the moment, but the government has not painted the entire industry black. Recent statements and actions seem to indicate that the government recognize the inherent potentials in distributed ledger technology (DLT)
As reported by DemandSolutionNews in October 2019, the President of China, Xi Jinping stated that blockchain would be a “core technology” in the country. The Chinese leader also called for the development and integration of the blockchain sector.
Also, the country is enlightening the populace on the benefits of blockchain technology and recently passed a cryptographic law that would come into effect in January 2020.