Sunday, November 27, 2022

China Intensifies Crypto Trading Squeeze on ‘Exchange-Like Services’

China Intensifies Crypto Trading Squeeze on ‘Exchange-Like Services’

In the cryptoverse, all eyes have been on China after the Chinese Communist Party banned cryptocurrency exchanges in the nation last year. Now, the CCP’s taking the crackdown one step further in targeting “exchange-like services” in general, even if these services aren’t explicit cryptocurrency exchange platforms. 

Also read: Will the US Issue a Federally-Backed Cryptocurrency?

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Apps, Platforms Under Scrutiny

The Chinese government is reportedly aiming to widen its ban on cryptocurrency exchanges to encompass trading bans on “online platforms and mobile apps that offer exchange-like services.”

The move isn’t necessarily surprising, as Chinese cryptocurrency investors immediately shifted trading operations in droves onto alternative apps and platforms after the domestic exchange ban in 2017. This dynamic mitigated the efficacy of the original ban, leading to ripe conditions for another government response.

And respond they will, as Bloomberg is now reporting that the CCP is preparing to “target individuals and companies that provide market-making, settlement and clearing services for centralized trading” in the cryptocurrency ecosystem.

Time to get in line crypto traders, says the CCP.

The takeaway? China is going to start pressuring domestic companies to mitigate large-scale trading vectors on their platforms, while simultaneously continuing to prevent Chinese investors’ access to foreign exchanges.

Interestingly, Chinese regulators are still going to officially permit small-scale peer-to-peer cryptocurrency trades for now.

Chinese Crypto Operations Move Abroad

A s authorities continue to constrict the viability of cryptocurrency enterprises in China, Chinese crypto companies are considering their options abroad with more and more urgency.

For instance, over the past several weeks the space has seen numerous domestic Chinese exchanges find workarounds, e.g. beginning to seek operating licenses in other Asian nations in the cases of Binance and OKCoin.

Beyond exchanges, mining operations in China are also mulling their options. Reuters just reported over the weekend that Chinese cryptocurrency mining maestros Bitmain are officially considering moving operations over to Canada and the state of Quebec specifically.

While the cheap excess electricity in Quebec doesn’t hurt, it’s the promise of being free to operate that’s really enticing Bitmain and other companies to transition beyond the reach of the CCP.

What’s your opinion? Do you think China is clearly trying to phase out cryptocurrency use as much as possible? Sound off in the comments below.

Images via Quartz, Foreign Brief

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