REGULATION

Compilation and Verification of China's Ban Phenomenon: Huobi Service Adjustments, Hong Kong Discusses Ban on Retail Investors, Uniswap Blocked

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Compilation and Verification of China

The Chinese government has recently issued a series of bans related to cryptocurrencies. Although many of these statements are not new, they have still caused market turmoil. This article summarizes the changes within China after the bans and the potential impact they may have on users.

What are the recent regulatory factors in China?

  1. The China Internet Finance Association and other institutions prohibit financial and payment institutions from handling cryptocurrency businesses.
  2. The Inner Mongolia Development and Reform Commission: Will continue to intensively regulate cryptocurrency mining in the future.
  3. Chinese Vice Premier and Director of the Financial Stability and Development Committee Liu He: Crack down on Bitcoin mining and trading activities.

According to Chinese media Wu Shuo Blockchain, apart from the State Council's message about cracking down on Bitcoin mining, there is no more specific information available. These uncertainties may also cause market fluctuations due to small news or rumors. After all, 60% of contract trades come from China, and with Chinese miners holding a large amount of Bitcoin and Ethereum, it will inevitably have an impact on the market.

Wu Shuo Blockchain believes that market turbulence will continue in the next week or even month.

1. Huobi Mining Machine Service Adjustment, OTC Unaffected

Huobi stated that it will cease the sale of mining machines and related services within China and will suspend custody mining machine services for users who have purchased Bitcoin mining machine products. This move is reportedly to actively cooperate with China's latest regulatory policies.

Furthermore, Huobi clarified that its OTC over-the-counter trading service is not affected. However, people are still concerned about the next regulatory actions, which may restrict all services related to the Renminbi.

2. Hong Kong to Discuss Legislation to Ban Retail Investors

This news is not new, and the policy is independent of the Beijing authorities, only the timing of the announcement is similar.

Last year, Hong Kong conducted public consultation on amending the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, completed on May 21 this year. This includes the "licensing regime for virtual asset service providers," which will be submitted for deliberation in the 2021-2022 Legislative Council session.

The consultation summary states, "Licensed virtual asset service providers can only provide services to professional investors (referred to as 'only professional investors can request'), and must implement strict criteria to determine which virtual assets can be traded on their platforms."

Licensed virtual asset service providers also need to comply with specified regulatory requirements, including financial capability, knowledge and experience, business soundness, risk management, segregation and management of customer assets, financial reporting and disclosure, prevention of market manipulation and misconduct, and prevention of conflicts of interest.

The primary target of cryptocurrency industry regulation in Hong Kong is mainly cryptocurrency exchanges, as they are the most common. The development will be reviewed from time to time, considering including other virtual asset activities in regulation. If the relevant regulations are passed, it may have an impact on the interaction between general users in Hong Kong and local exchanges.

The Hong Kong-based exchange FTX has taken action before the legislation is passed, restricting registration to "new users who are Hong Kong residents" only after qualification review, with conditions that meet the requirements of professional investors, which include assets equivalent to eight million Hong Kong dollars, not conditions that ordinary retail investors meet.

Unlike Taiwan, which has set extensive regulations on virtual currency activities in its draft without a legal licensing system, primarily targeting exchanges.

Supplementary report: What is the anti-money laundering draft that the FSC will discuss with eight Taiwanese virtual currency operators?

Supplementary report: Interview with Professor Yang Yueping | How to comment on the draft measures to prevent money laundering on Taiwan's virtual currency platforms?

3. Uniswap Blocked Outside the Wall

Ethereum's largest exchange, Uniswap, has also been blocked outside the Chinese firewall recently. Due to the higher anonymity of decentralized exchanges, it may be banned from linking due to anti-money laundering regulations:

However, looking at other platforms, it is found that SushiSwap has not been blocked after verification:

The well-known stablecoin protocol Curve Finance also has no issues: