REGULATION

After China's regulatory cleanup, opinions from various sectors, differences in bans, how has Bitcoin performed after the sharp drops in regulation over the years?

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After China

On 9/24, a message from the People's Bank of China regarding the ban on cryptocurrency trading, along with announcements from Huobi and Binance prohibiting new registrations from China, suggests that authorities may be looking to completely eliminate cryptocurrency trading activities. However, as the market digested the FUD (fear, uncertainty, doubt), Bitcoin also rebounded to levels close to before the drop.

China's Regulatory Updates

In May of this year, China announced a ban on financial institutions and payment companies from handling cryptocurrency transactions. In June, further crackdowns on mining activities led to domestic miners moving abroad, while foreign miners also began to exit the industry. Xinjiang was removed from being the largest Bitcoin mining region globally.

Subsequently, Chinese government agencies have occasionally issued warnings and official announcements regarding cryptocurrency activities. However, the announcement on September 24 by the central bank seems to intend a comprehensive ban on the cryptocurrency trading market. The announcement states:

Cryptocurrency-related activities are deemed illegal financial activities, including fiat currency exchange, acting as intermediaries in transactions, token issuance, and derivative trading. Overseas cryptocurrency exchanges providing services to Chinese users via the internet are also considered illegal financial activities.

Moreover, what sets this apart from previous actions is that the announcement includes "enforcement agencies" such as the CAC (Cyberspace Administration of China), SPC (Supreme People's Court), SPP (Supreme People's Procuratorate), and PSB (Public Security Bureau).

Except for CAC's involvement in the previous ban on ICOs a few years ago, the inclusion of these units that have not previously been part of bans suggests that cryptocurrency trading has escalated to the level of financial crime.

Following this announcement, Bitcoin plummeted from $45,809 to $40,683 in a day, with exchanges like Huobi and OKEx, which cater mainly to Chinese users, experiencing even more drastic drops in their platform tokens.

Responses from Various Exchanges

Responses from various exchanges to the policy changes are as follows:

  • Exchange CoinBene: Permanently closing services in China, Hong Kong, and Taiwan regions
  • Exchange AEX: Ceasing registration and services in China
  • Futu Securities: Halting trading of Grayscale GBTC and five other funds from October 1
  • SparkPool: Closing mining pool services within China
  • Loopring Protocol: Ceasing wallet and trading services for Chinese users
  • ZKSwap: No longer supporting website, app, or services access for Chinese IP users
  • DeBank: Discontinuing certain functions and services for Chinese users
  • TokenPocket: Ceasing relevant functions and services for Chinese users
  • OKEx: Prohibiting Chinese users since 2017 with no related business in China
  • Binance: Temporarily suspending new mobile registrations from China
  • Huobi: Temporarily suspending new registrations from China on September 24, with existing users in Taiwan, Hong Kong, and China to complete orderly withdrawal by December 31 this year

Despite the belief in various circles that not all warnings and bans released by China are new, and many are reiterations, the overall market experienced a sharp decline, especially with significant drops in exchange platform tokens.

According to previous statistics, tokens like HT, OKB, and GT saw double-digit declines, with drops of over 40% since September 24, now stabilizing around 20%. However, the market remains cautiously optimistic, and there has been some rebound in the cryptocurrency market.

Industry Perspectives

London-based fintech data analyst Boaz Sobrado:

The market tends to overreact to news. There's a joke in the crypto space that "China bans Bitcoin for the hundredth time." I'd bet that a year from now, people will still be trading Bitcoin in China.

CoinShares Chief Strategy Officer Meltem Demirors:

This is probably the 20th time that China has banned Bitcoin. Each ban has something a little bit different, and this is just part of the course. It keeps happening, and this time, it's likely related to the central bank digital currency. You can only ban something once, and every subsequent ban just acknowledges that you can't really ban it.

Additionally, Kraken's Business Development Lead, Dan Held, responded to the Chinese regulations with exaggerated yawning as a gesture of indifference.

Digital Asset Director at VanEck, Gabor Gurbacs, listed the flourishing tech giants that emerged after being banned in China.

Lastly, a chart comparing China's historical regulatory announcements with Bitcoin's price movements over the years is provided. Despite previous instances in 2013 and 2014 where Bitcoin experienced prolonged recovery periods due to regulatory news, price drops triggered by regulations seem to have been good entry points.

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