China crypto players shrug off Beijing’s latest crackdown

By Samuel Shen and Andrew Galbraith

SHANGHAI, May 20 (Reuters) – China’s latest salvo towards cryptocurrencies has pushed a brutal selloff in bitcoin markets however retail merchants, miners and even crypto finance corporations reckon Beijing’s bark is louder than its chunk.

China’s announcement on Tuesday of a more durable ban on banks and cost firms providing crypto-related companies furthered a selloff that briefly wiped $1 trillion off crypto market capitalisation.

But fears that the foundations would cripple cryptocurrency markets and mining on the Chinese mainland seem baseless. Cryptocurrencies may nonetheless be purchased from China on Thursday and funding schemes promising juicy returns for mining them remained operational.

Bobby Lee, founder and CEO of Ballet, a cryptocurrency pockets app, mentioned he thought the announcement was merely an try by regulators to guard retail traders from unstable markets, however that it could be a problem for banks to determine crypto-related dealings.

“If you take a look at the banking exercise in China, tens of millions or perhaps billions of transactions occur every day. From all that … what number of are literally actually crypto companies versus eating or e-commerce? It’s nearly unknowable,” mentioned Lee, previously CEO of BTC China, China’s first bitcoin alternate.

It’s not the primary time China has banned crypto-related monetary and cost companies. Beijing issued comparable bans in 2013, and in 2017, although the latest one has expanded the vary of prohibited companies. The repeated bans spotlight the problem of closing the loopholes.

On Thursday, Reuters discovered it was nonetheless attainable for Chinese people to purchase bitcoin and different cryptocurrencies and commerce them on abroad crypto exchanges corresponding to Binance. Yuan funds for these purchases might be made through banks or commonly-used on-line cost platforms in over-the-counter (OTC) markets.

“If you’ve got bitcoin or ethereum, and I need to purchase some, I can simply ship cash to you thru banks. Just do not write down something like bitcoin or ethereum,” mentioned Mr Li, who sells cryptocurrencies on behalf of miners.

“Of course, banks have inner risk-management. If the transaction quantity is just too huge, you may be caught,” mentioned Li, who was unwilling to present his full identify due to the sensitivities of the difficulty.


Players in China’s crypto mining trade have been additionally broadly unfazed by the latest crackdown, once more citing the difficulties regulators would have in figuring out transactions.

China-based miners have the other downside to traders, as they have already got bitcoin which they should change for yuan to pay their electrical energy prices.

Mining is huge enterprise in China, which accounts for as a lot as 70% of the world’s crypto provide, in keeping with some estimates, though others say that proportion has come down in recent times.

“The Chinese authorities does crack down infrequently, however presently it’s not overly difficult to transform mined cash to RMB for Chinese miners,” mentioned Thomas Heller, chief enterprise officer of Compass Mining, utilizing one other phrase for China’s forex.

Although the brand new guidelines ban crypto-related funding merchandise, such schemes are nonetheless offered on-line.

One platform providing retail traders an opportunity to quadruple their cash over three years by shopping for computing energy for miners of a smaller cryptocurrency, Filecoin, which has surged in recognition in China, nonetheless appeared to be accepting cash on Thursday.

Flex Yang, chief govt officer of Babel Finance, a cryptocurrency financing agency, remained bullish.

“Bitcoin costs dropped greater than 50% final yr in March however ultimately rebounded again to a brand new file excessive,” Yang mentioned.

“In the long term, bitcoin nonetheless makes for a wonderful asset class for portfolio managers in search of progress.” (Reporting by Samuel Shen and Andrew Galbraith in Shanghai, Additional reporting by Kevin Yao in Beijing, Writing by Alun John, Editing by Vidya Ranganathan and Catherine Evans)

Recommended For You

About the Author: Daniel