Leading Crypto Exchanges Cut Ties with Chinese Users after Beijing Crackdown

With reports from China, global crypto exchanges have stopped providing services to Chinese users. In the lead, Huobi, one of the best crypto exchanges worldwide, has ceased opening new accounts for mainland Chinese users. But, of course, it’s no surprise after the recent Beijing crackdowns on cryptocurrencies.

Beijing Crackdown on Virtual Currencies

On Friday, the People’s Bank of China declared trading and investing in crypto as illegal, among other crypto-related activities. In addition, the Chinese Central Bank targeted overseas crypto exchanges rendering crypto-related services to Chinese citizens.

Related: The Digital Euro May Surpass China in the CBDC Blockchain Race

On Sunday, Huobi reported that it would put an end to opening accounts for Chinese crypto investors. On the one hand, it would cease opening a new account for the Chinese, and on the other hand, it would slowly retire existing Chinese trading accounts. As a result, all registered Chinese traders on Huobi would lose access to their accounts by midnight December 31st, 2021.

Following that, another renowned cryptocurrency exchange Binance seconded the seizure. The company announced that Huobi blocked account registration using government-issued Chinese numbers. In addition, Chinese users can no longer download the Binance app in Mainland China.

Binance spokesperson insisted that the company takes compliance obligations seriously as per local regulators’ guidelines. Some of these cryptocurrencies had a large customer base in China. China offers most of the electrical energy used to mine Bitcoin and hosts one of the largest crypto farms.

Effects of Chinese Cryptocurrency Crackdowns

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This year has been tough on Bitcoin traders following the intensified cryptocurrency crackdowns by Chinese authorities. The toughened stand by China is not new for governments.

China is the second-largest economy in the world, following the United States. Its long-term worry is how virtual currencies would impact the nation’s financial stability. In 2017, the Chinese government banned ICOs (initial coin offerings) to raise money for cryptocurrency companies.

Following that, multiple crypto exchanges based in China moved out offshore. Due to the decentralized nature of cryptocurrencies, the crackdown wasn’t fully attainable. However, a loophole enabled Chinese traders to sell and buy virtual currencies on offshore accounts.

Earlier in the year, China banned Bitcoin mining. The recent move goes to destabilize and end all cryptocurrency-related activities. The move hits the global crypto economy in unprecedented ways.

Since the new era of virtual finance came into existence, this is the first time 10 Chinese government departments have agreed to put an end to the crypto sector. The move indicates the seriousness to which the government wants to save its sovereign currency, Yuan.

The Chinese investors move to sell their digital currencies on the global market at the exchange rates of USDT. The aftermath has spread panic across crypto markets and investors in general.