China’s cryptocurrency investors keep the faith even as exchanges Binance and Huobi sever ties with mainland users
- Chinese cryptocurrency investors say they are continuing to trade their virtual coins on overseas platforms as big exchanges end yuan support
- Beijing said this year that overseas platforms serving mainland users are illegal, which came after a widespread bitcoin mining crackdown
Huobi and Binance said they would disable transactions in Chinese yuan by the end of December. Huobi has already halted new registrations using phone numbers from mainland China and said it would start charging a 0.2 per cent monthly fee for any Chinese accounts with a balance next year. Binance said its Chinese users will only be able to make withdrawals from January.
The pull-out even ended over-the-counter (OTC) trading in yuan on these platforms, removing a major trading method among domestic investors after exchanges were forced offshore in 2017. Users could previously purchase cryptocurrencies with yuan through banks or commonly-used online payment platforms. At least eight other platforms have also announced they will no longer support yuan purchases from next month.
Still, some people who already have crypto holdings plan to carry on despite the legal risks and regulatory hostility, according to investors who spoke to the South China Morning Post on the condition of anonymity.
Common approaches to continue trading involve using virtual private networks (VPN), registering foreign email addresses, and shifting assets to less centralised exchanges.
There are ways to still be able to transact, according to one investor. Use a VPN to bypass the Great Firewall, sign up with a foreign email service, choose a country that does not have an identity system. There are many such countries, the investor said.
Although cryptocurrency investors have been facing an increasingly harsh regulatory environment in recent years, Beijing tolerated bitcoin in its early years. That changed in December 2013, when government regulators, led by the central bank, initiated China’s first bitcoin crackdown by telling banks not to provide payment or settlement services for cryptocurrency trading.
The crackdown gradually escalated over the years, and took another big leap in 2017, when authorities pushed exchanges like Binance and Huobi offshore.
When the 2017 ban was implemented, there was temporary chaos, as many exchanges suspended deposits and only allowed withdrawals, according to another cryptocurrency trader. At that time, some veterans formed private groups that popularised OTC transactions. This investor expected solutions because exchanges are more anxious than traders.
However, it is becoming increasingly difficult for people to get started in cryptocurrencies.
New users cannot sign up, nor will they be able to exchange crypto assets with fiat money, according to a third investor. This person said they could trade cryptocurrency with another type of digital token.
The investor also indicated that people could use a decentralised exchange for transactions without any intermediary, such as a bank or broker. There are risks, however, because no party will guarantee the loss if an account is hacked, the person said.