This weekly roundup of news from mainland China, Taiwan, and Hong Kong attempts to collect the industry’s biggest news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.
China regulations, FACT or FUD?
Typically, this weekly column takes a broad look at all the developments, news, and even gossip within China. This week, most issues took a backseat to news that another crackdown had hit the industry, threatening to topple markets in a full-blown bear market.
Leaving the mines
It was all fun and games until a bug came from above. Liu He, China’s vice premier and a member of the almighty eight-person politburo, led a meeting on financial risk prevention and control. Among the decisions was a crackdown on Bitcoin mining and trading activities, piercing the hearts of anyone who hoped to see a more open regulatory environment. There were immediate indications that the ruling would not be taken lightly, and the province of Inner Mongolia established a hotline to report people who disobey the order.
BTC.TOP, one of the largest mining pools in the world with 2.5% of the global hashrate, immediately complied by announcing that it was closing operations. That didn’t stop BTC.TOP founder Jiang Zhuo from taking to the Weibo microblogging platform to announce that Bitcoin was a tool that China could use to break the monopoly of the US dollar in international trade.
Western experts struggle to find answers
China’s role in the mining community had been a major source of mistrust between the East and the West, with some Bitcoiners claiming that China’s potential control of the mining community could threaten the chain’s ability to remain fully decentralized. Consequently, some celebrated the news of the ban, thinking that the mining community would become more fragmented. However, the fact that China bans operations does not mean that Chinese companies will lose their dominant position in the industry. As Primitive Capital partner Dovey Wan pointed out, many miners are simply packing up and moving out of the country. Registering and basing your operations in regions like the US, Kazakhstan or even Africa would not prevent the mined BTC from belonging to Chinese miners, it would only make the centralization of the network more difficult to trace.
Exchanges and trading platforms have not been greatly affected so far. In 2017, when exchanges were first subject to regulations, the impact was much greater as many of the major exchanges were registered in China. Today, all platforms are domiciled in other countries, have servers abroad, and serve much more diverse user bases. Local authorities will have much less interest in interfering with these operations, as the impact on Chinese society is much less obvious. Huobi temporarily suspended futures trading for Chinese users, but it doesn’t appear to be a permanent change to the way they operate. Futures platform Bybit revealed that they were closing registered accounts with Chinese phone numbers by June 15, but since most of their users are not Chinese, the negative impact will be far less than the risk they would take by continuing to serve customers. Chinese users.
Take your cake and eat it too
This looks like a winning situation for China as it can get closer to its carbon neutral targets by reducing the number of Bitcoin mines. At the same time, it is also consolidating eCNY as the only digital asset in the country. Finally, the profits from mining and exchanges will likely continue to flow to the mainland, as the offices of exchanges and mining operations are unlikely to follow the hardware outside the country.
Don’t forget about Hong Kong
Hong Kong is pushing forward its cryptocurrency retail ban by announcing measures that would place a minimum threshold of around $ 1 million on investment. Christopher Hui, Hong Kong Secretary of Treasury and Financial Services, has defended the requirements stating that he believes they protect investors, prohibit market manipulation and protect against money laundering and terrorist financing. The decision will definitely make the cryptocurrency in the special administrative region easier to track and make it harder for mainland Chinese citizens to bypass the rules.