Huobi, OKG tumble in Hong Kong after China criminalises cryptocurrency trading to rein in financial risks

Huobi will stop signing up mainland users and begin phasing out existing Chinese customers, and will refund their assets by year-end: statement

Some HK$1.2 billion was erased in early stock losses in Hong Kong following the PBOC directive on Friday

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China's official app for digital yuan. The government is pushing its own digital currency and has banned all cryptocurrency transactions in the local financial system. Photo: Reuters

Published: 3:39pm, 27 Sep 2021Updated: 10:31pm, 27 Sep 2021

Cryptocurrency-related stocks plunged in Hong Kong, bearing the brunt of China’s latest regulatory squeeze on private businesses as authorities moved to ban all transactions to stop financial risks from spreading to society.

The People’s Bank of China on Friday intensified its clampdown on digital currency by declaring all cryptocurrency transactions illegal and singling out offshore exchanges that target mainland Chinese users. It also promised to take action against its citizens for marketing the illicit services.

About HK$1.2 billion (US$155 million) was erased in losses in some sector stocks in Hong Kong, with exchange operator Huobi Technology taking the biggest hit with a 21.5 per cent slide to HK$7.85. OKG Technology, an affiliate of OK Coin, lost 19.1 per cent to HK$0.26.

Meitu and Grandshores Technology declined by more than 6 per cent, while PC Partner, a manufacturer of graphic cards critical in bitcoin mining, also lost 5 per cent.

“Government regulation remains the key headwind to the cryptocurrency market” as tokens threaten state monopoly over money, analysts at BCA Research said in a note to clients. Cryptocurrency mining also conflicts with global climate change ambition, more so in China where energy production is dominated by coal and where 65 per cent of global mining activity occurs, it added.

While China has attempted to halt the uses and expansion of digital currencies in its economy for some years, the latest order, issued along with nine other state agencies, is the harshest yet against the likes of bitcoin and its peers.