Chinese authorities have warned local cryptocurrency firms about virtual currency trading, and this has now caused at least five crypto exchanges to block their operations and for the course of this month will not provide services for users in the country.
President Xi Jinping, who had previously proclaimed his support for the development of blockchain technology in the country, causing confusion within the citizens as China, is now increasing the pressure on the digital currency industry. The People’s Bank of China, the Chinese central bank, is among other financial authorities who has ordered cryptocurrency businesses to shut down. It has also cautioned investors about investing in the virtual asset trades.
Since the 2017 crypto cleanup, the recent restrictions on cryptocurrency businesses have been the biggest obstacle for industry. The purchase of cryptocurrencies like Bitcoin(BTC)trade and Ethereum (ETH)trade with traditional fiat money has been banned before, but crypto trading remained common through exchange services. The new wave of restrictions has caused the Bitcoin price to decrease to its lowest level in six months; and recovering several days later Wednesday.
The Asian-Pacific region is a host to more than 50 crypto exchanges and makes up 40% of the transactions for Bitcoin for the first 6 months of this year, mainly in China, according to Chainalysis report. In the past week, however, Chinese exchange platforms Bitsoda and Akdex declared the end of their crypto services, followed by an announcement of Biss crypto exchange that it has stopped its operations as the executives are dealing with government officials.
Btuex declared on Monday that it will close down after the Chinese government’s orders, and will reopen later only to provide services for international users exclusively. Idax also stated that it plans on focusing on users abroad and will be no longer in service for the users in China.
Katie Talati, a head researcher from Los Angeles, working at Arca, states that the recent progress by the Chinese government is a way to gain firm control over the crypto market in the country, such as exchanges, crypto miners and token issuers. She believes that China is moving in the similar direction as its neighbor Japan that have a system of clear regulations for digital currency businesses.
Currently, the uncertain future of cryptocurrency in China has caused traders to transfer their digital assets temporarily to safer places; the cryptocurrency wallet application ImToken reported that Tether (USDT) transactions surged to a staggering $66 million the day China issued the warning against the trading of cryptocurrency.
Tron founder, Justin Sun, kept his optimism and said that despite the recent developments, blockchain’s future in China is still positive.