Bitcoin prices have risen despite being locked out of one of the largest markets as the Chinese government declared all cryptocurrency transactions illegal last week and banned citizens from working for crypto companies. bottom.
According to experts, large Chinese crypto miners such as Bitcoin and Ethereum will take powerful, electricity-intensive servers abroad. Many Chinese start-ups involved in the exchange and trade of digital money are also expected to rebase offshore after removing domestic customers from the roster.
This shift highlights how cryptocurrencies can circumvent government regulation.
“The exchange is pushing offshore anyway, the exchange business needs cloud infrastructure, it needs developers, it needs control to get things going in the right direction, so that’s Taipei, Whether it’s in San Francisco, Singapore or Shanghai, it doesn’t really matter. These businesses are very virtual, “said Zennon Kapron, founder of Singapore-based financial consulting firm Kapronasia. Stated.
“The real impact we’ve probably seen is on the miners and most of them. [are in] The process of shifting overseas or [have] The move abroad has already been completed. “
The strongest anti-crypt action ever
On September 24, Beijing’s financial authority, the People’s Bank of China, issued a statement that cryptocurrencies lack the status of other financial products. Notices issued in collaboration with nine other government agencies, including the Department of Public Safety, declare that all relevant businesses are illegal and warn that cryptocurrency transactions that occur outside China will also be treated as a crime. bottom.
China’s official Xinhua News Agency explained the ban on Friday, reporting that it disrupted the financial system of crypto-controlled economies and contributed to crimes such as money laundering.
Cryptocurrencies — digital commerce tools that are not linked to central banking authorities — first appeared in China around 2008. Banks of China began banning the use of digital currencies in 2013 and tightened regulations since 2016.
According to the news website, China was the largest Bitcoin miner in the world and supported the largest exchange in volume. CryptoVantage.. It is said that many of the people who suddenly made millions of dollars when the price of Bitcoin soared four years ago were in China.
Chinese miners and traders head to Singapore
China’s ban imposes penalties on international exchanges that do business with people in China, and news reports show that international crypto exchanges are recently trying to break relationships with Chinese clients. .. However, the company itself remains largely quiet.
A spokesman for the cryptocurrency exchange Coinbase said Wednesday that “there is nothing to share at this time” about the crackdown in China. Worldcoin Global, a new type of cryptocurrency based in the United States, did not respond to requests for comment.
Increasing pressure on China’s cryptocurrencies over the past few years has left stakeholders away from the country, said Capron, the country’s original cryptocurrency peer-to-peer lending startup, a small link between individual lenders and borrowers. In China, he added that less than a quarter of the company) remains.
As Chinese withdraw from the market, digital currency mining (the process of using a computer to distribute Bitcoin and verify cryptocurrency transactions in exchange for payments) should become easier abroad, Capron said. rice field.
He added that small businesses may be easier to mine without competing with huge Chinese businesses.
Singapore is imminent as a major dependable place for operations that do not require physical presence on land. The country has accepted about 300 cryptocurrency license applications as of July. According to Asian news reports, e-commerce giant Alibaba and digital financial companies Yillion Group and Hande Group have applied from China.
Jason Sue, vice president of the Taiwan FinTech Association Industry Group, said other Asian countries lacked Singapore’s expanded legal welcome mat.
“Where does that money flow? I think it’s a question that needs to be answered,” Sue said. “In Asia, I think Singapore will be their destination. Singapore clearly has the clearest regulations and wants to attract more digital fintech. [financial-technology] Company. “
Outside of Asia, Amsterdam and Frankfurt “have established their footsteps as international centers” for financial technology, said Rajiv Biswas, chief economist for the Asia-Pacific region of market research firm IHS Markit. Financial technology covers cryptocurrencies.
Western Europe has been ranked as the world’s largest crypto economy this year, with more than $ 1 trillion, or more than 25% of global trade, activity, news and data services flowing in, Chainalysis said. Europe’s surge follows similar rapid growth in 2020.
The final resurgence of cryptography in China?
Chinese officials are now targeting cryptocurrencies as part of a broader “overnight crackdown on wealth” and to “clean up the wild west of the wild,” Sue said, mostly regulated. Mentioned market sectors that have not. He predicts that trade has sunk underground for now and that China will eventually announce official digital currencies issued through major banks.
Some countries are considering adopting new digital currencies that allow people to exchange money without the intervention of banks or the like. Proponents argue that these currencies can take advantage of cryptocurrencies that facilitate the exchange of money without price fluctuations in decentralized digital assets such as Bitcoin.
Song Seng Wun, an economist in the private banking division of Malaysian bank CIMB, said Chinese authorities could ultimately take a more tolerant view of non-state-licensed digital currencies. He added that blockchain, the core technology behind public trading ledgers that make crypto trading transparent, could continue to be developed in China for other purposes.
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