As China closes its doors to cryptocurrencies, exchanges shift their attention overseas

‘It’s an end, as well as a new beginning,’ said OkCoin, one of China’s most popular exchanges in a statement

PUBLISHED : Tuesday, 31 October, 2017, 8:30pm
UPDATED : Tuesday, 31 October, 2017, 10:47pm

Some Chinese bitcoin exchanges – having had their trading officially ordered to halt last month as the cryptocurrency comes under renewed scrutiny by the domestic authorities – have turned their attention instead to selling overseas.

The mainland’s ban on transaction between renminbi and digital assets at exchanges came into effect on Tuesday. That followed banning fundraising through initial coin offerings in early September.

But now it seems some operators have already started looking elsewhere for business., an overseas platform operated by Chinese digital currency exchange chbtc, has said it will make an international trading function available from Wednesday, allowing users to first sign up for accounts and deposits.

The Chinese-English bilingual site offers price quotations for nine cryptocurrencies including bitcoin and ethereum, the two largest by value. Transactions can either be denominated in bitcoin or USDT, a token created by Tether which has an equivalent value to US dollar.

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Huobi and OkCoin, two of China’s other most popular exchanges, revealed their plans on Tuesday evening, the last day they were able to accept renminbi-denominated bitcoin trades.

“It’s an end, as well as a new beginning,” said OkCoin in a statement on its homepage, while promoting its offshore exchange OKEx, which will allow investors to conduct “consumer-to-consumer trading of digital currencies against legal tenders of many countries.

In a similar move, Huobi announced it has launched a Singapore-based professional portal, offering investors peer-to-peer trading services as a means of payment in place of legal tenders. The team will also operate a Hong Kong subsidiary.

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“Once the work has been completed to help investors withdraw from platforms, and all trading services have halted, we will be able to provide services using US dollars and digital assets to qualified investors worldwide,” said Li Lin, Huobi’s founder said in an open letter.

Investors can also choose to trade digital won-denominated assets on the company’s portal based in South Korea, according to Huobi.

A form of virtual currency created using blockchain technology, cryptocurrencies have been under close regulatory scrutiny after explosive growth raised concerns that a meltdown of the unregulated market could spill over onto China’s financial market and increase instability.

However, the latest moves by exchanges had sparked renewed speculation that China may loosen its grip on the digital currencies after the 19th Party Congress, which ended last week.

Nearly 20 Chinese exchanges announced plans last month to halt digital currency trading by no later than October, after meeting with the country’s central bank.

Why has China declared war on bitcoin and digital currencies?

Cryptos are not legal tender in China, and the central bank has placed an outright ban on banks or financial institutions holding them, although such regulation leaves room for individuals to own them.

Even amid the clampdown, China has remained a major market for bitcoin investors, with as much as 90 per cent of transactions worldwide still taking place in the country, which also generates roughly one in every two new coins created through mining.

On the US exchange Bitstamp, bitcoin currently trades at US$6,095, a record high, after surging 49.2 per cent over the past three months.