Bitcoin and More Topple China’s Crypto Crackdown as They Continue Weekend Rally

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Despite China’s crypto crackdown continuing to have consequences this weekend, the prices of cryptos rebounded after a brief slump. This morning, Bitcoin was at $43,700, up 0.4% in the past 24 hours, while Ethereum was at $3,075 up 2.45%, according to CoinMarketCap.

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Yesterday, Huobi, one of the world’s largest crypto exchanges, announced on its website that it had ceased registrations for new mainland Chinese users “to comply with local laws and regulations.” The exchange added that it will “gradually retire existing Mainland China user accounts by Dec 31, 2021, and ensure the safety of users’ assets,” as well

“We will inform users of the specific arrangements and details through official announcements, e-mails, text messages, etc. Huobi Global has always been dedicated to offering digital asset trading services and ensuring the safety of customer assets, while following all applicable laws. We apologize for any inconvenience caused and thank you for your understanding and support,” according to the announcement.

Last Friday, the People’s Bank of China reiterated its tough stance on cryptos, announcing on its website that all crypto-related activities were illegal. The announcement sent Bitcoin tumbling 5.5%, while Ether was down 8.4%, according to CoinMarketCap on Friday. In its posting, the bank added that virtual currency exchange, virtual currency trading as a central counterparty, provision of matching services for virtual currency transactions, token issuance financing and virtual currency derivative transactions are all illegal financial activities and are strictly prohibited and banned in accordance with the law.

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The bank explained its decision by saying that in recent years, Bitcoin and other virtual currency transaction activities have disrupted economic and financial order, “breeding money laundering, illegal fund-raising, fraud, pyramid schemes and other illegal and criminal activities, seriously endangering the safety of people’s property.”

In addition, Binance also said that account registrations using Chinese mobile phone numbers are now blocked and that the Binance app is also no longer available for download in China. “Binance takes its compliance obligations very seriously and is committed to following local regulator requirements wherever we operate,” a spokesperson told CNBC.

The sentiment is echoed by James Butterfill, investment strategist at CoinShares, who believes that the announcement doesn’t come as a surprise. Several experts, however, note that China’s clamping down will have little impact on cryptos, notably Bitcoin in the long-term.

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Butterfill, investment strategist at CoinShares, spoke on the matter with GOBankingRates on Friday, saying: “This has to be the 20th time or whatnot that China has supposedly banned Bitcoin. The first one was all the way back in 2017, and there have been several previously this year. Yes, there’s always something ‘different’ about the bans, but I think you get my drift here. This happens all the time and it’s never really dramatic in the larger scheme of things.”

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He added that this may also relate to capital controls, with the Evergrande collapse, to prevent contagion and an exodus of capital from the country, a clampdown on Bitcoin is an easy target. “It should surprise no one that China doesn’t like Bitcoin. It is the pure antithesis of their regime of top-down centralized currency control with Orwellian surveillance features and full removal of all freedom of choice. Bitcoin is freedom money which inherently respects property rights, cannot discriminate against its users in any way, and doesn’t allow for confiscation, censorship or debasement. Obviously, the Chinese Communist Party will hate that,” Butterfill said.

Coinshares said this morning that both Ether and Bitcoin saw inflows last week, showing that the recent headwinds for digital assets, such as the widened China ban, were seen as buying opportunities for investors.

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Bitcoin saw the largest inflows of any investment product, totaling $50 million, while Ether saw $29 million in inflows, according to Coinshares data.

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Last updated: September 27, 2021


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