China’s cryptocurrency veterans flee their home market amid Beijing’s increased intolerance of bitcoin

At least 21 Chinese cryptocurrency companies are shunning their home market after Beijing referred to them as illegal financial activities in September

The fresh crackdown on cryptocurrency exchanges followed the shutdown of many domestic bitcoin mining operations over the summer

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Huobi was once a major cryptocurrency trading platform in China, but the company said it will terminate services for mainland users by the end of the year following a fresh crackdown from Beijing on exchanges. Photo: Shutterstock

Published: 8:00pm, 8 Oct 2021Updated: 11:04pm, 8 Oct 2021

Nearly two dozen cryptocurrency companies, almost all backed by Chinese industry veterans, have exited the mainland since Beijing unleashed a second sweeping crackdown on unsanctioned digital currencies this year.

Binance and Huobi, the world’s leading cryptocurrency trading platform in terms of volume, are among the companies that have left the country. Miners like SparkPool, one of the world’s largest Ethereum mining pools, and intermediary information and data providers have also fled.

The exodus is the result of a campaign launched in late September by 10 authorities in China, including the Ministry of Public Security and the Supreme People’s Court, when the government reiterated its ban on cryptocurrency trading. The People’s Bank of China explicitly warned foreign platforms about providing services to Chinese citizens, calling them illegal financial activities.

The campaign has served as a “clearer signal to the cryptocurrency industry that the space for relevant institutions and professionals is being squeezed more and more,” said Su Xiaorui, a senior analyst at research firm Analysys.

At least 21 companies have now exited China’s cryptocurrency market, according to a South China Morning Post analysis. Many have shifted their focus to overseas markets where bitcoin has become more accepted as a financial asset.

Within days of the latest crackdown, Binance swiftly stopped registering new mainland Chinese users. Then Huobi made the same decision, saying it would phase out access for existing Chinese traders by the end of the year.

As the companies retreat, they are also undergoing personnel changes. On Wednesday, Huobi chief operating officer Zhu Jiawei announced his exit from the company. Founder and chairman Li Lin said in a WeChat post that Zhu had actually quit in April, but they agreed to delay publicising the information to avoid negatively impacting the company.

Binance also lost its chief financial officer in May when Zhou Wei left the company.

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