China’s Crypto Clampdown: What it means
Welcome to The Daily Forkast, Sept 27th, 2021, presented by Angie Lau. For the latest in blockchain & crypto news. On today’s show:
00:00 Coming Up
00:30 Chinese Industry takes China’s crypto ban seriously
04:46 Global markets unfazed by China ban
06:44 Exchanges look for regulatory havens
09:07 Interview with Sam Bankman-Fried
What we’re seeing the fallout already, one of the first things to check out is how crypto exchanges are reacting, and that’s what you’re looking for to see how participants view the possibility of enforcement. Huobi has stopped registering new customers in mainland China and says it plans to retire all mainland China user accounts by the end of this year. Industry leaders in China say China is very serious this time, especially when this notice is issued by not just the central bank, but a united front from all legal public security and banking authorities. Crypto exchange Gate.Io says it will pause onboarding new Chinese users, but existing users won’t be affected at this point. They account for 25% to 30% of its users. Both Binance and OKEX told Forkast.News that they have been blocked in mainland China since 2017. Meanwhile, industry leaders say they are supporting a ban, especially since it was issued by so many authorities. Zhou Yu of UnionPay, says the move suggests a stricter than ever regulatory stance on cryptocurrency.
Several experts told Forkast.News the notice implies that trading between individuals is not banned, so the impact for them might be minimal. But one investor who requested anonymity said some casual investors might just give up, however, hardcore traders may find other ways to continue operating, possibly by using less regulated decentralized exchanges. Over onto the markets now, although we did see a dip, it proved relatively small compared to other recent headline grabbing events. While US$130 billion was wiped off the total global cryptocurrency market cap between September 24 and 26 that pales in significance compared to the US$932 billion wiped out in May’s crash. And as trading got underway Monday morning Asia time, markets were bouncing back. The more nuanced story here in the right question to ask is where is the money flowing to? Some big movements in crypto flow.
Bitcoin dropped to just under US$41,000 Friday, but has since rebounded 7%, trading above US$44,000 Monday morning Asia time. One expert told Forkast.News that such stories are no longer spooking investors as they used to. D’Anethan says growing global crypto enthusiasm could well balance out a lack of transactions from China. By the way, more of our interview with Sam Bankman-Fried, CEO of the second-largest crypto derivatives exchange in the world, FTX, a little later. But for the bigger picture and the bigger context here, China’s clampdown on crypto started much earlier than Friday. You’ll remember after the crackdown on mining, it triggered mass relocation of mining operations out of China earlier this year. Well, now exchanges are looking for more transparent regulatory havens. Singapore, which has a licensing framework for crypto under its Payment Services Act, has seen several Chinese cryptocurrency exchanges, including Binance, Bybit, Huobi, OKCoin, all set up shop in the city-state. And just last week, the United Arab Emirates Securities and Commodities Authority signed an agreement with the Dubai World Trade Centre Authority supporting crypto trading and related financial activities in its free zone.
Now, over in India, the industry is seeing rapid growth despite concerns over the slow progress of crypto regulation. Huge numbers are actually getting involved in crypto investment.
India’s crypto industry is on a roll. There are currently 230 startups in the country that have registered a revenue growth of 40% to 50% in the last two years. That’s four times the pace of the wider technology sector, and funding for those startups has increased eight times, with Silicon Valley investment titans including Mark Cuban and Tim Draper getting on board. Retail ownership of crypto assets soared 612% between 2019 and 2020. And the number of Indian adults investing in crypto has more than doubled in the past year, increasing from seven million in 2020 to 15 million in 2021. That’s 1.8% of the adult population. That’s meant foreign exchanges have been keen to get in on the action with moves into India. Binance acquired WazirX in 2019, and CrossTower entered the country earlier this month.
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