The Chinese government is taking its regulatory hammering one step further by closing down unofficial Weibo channels that facilitate OTC trading between retail investors. According to Bloomberg, many Chinese investors held their money on exchanges such as Binance, OKEx, and Bitsoda and stand to potentially lose their holdings depending on regulation, November 27, 2019.
Pro Blockchain, Anti Crypto
Over the last month, the stance of the Chinese government has constantly regurgitated in the media with a few false narratives making the rounds. It was reported that China was planning to open its doors to reasonable cryptocurrency regulation, but once again, we have never been further away.
In 2017, China banned crypto exchanges from operating in the country, and users started to gradually shift toward Weibo and WeChat channels where a designated entity facilitated trade between two other parties.
Exchange operators Bitsoda and Akdex have announced the cessation of their operations while another exchange, Biss, will halt their services while they are probed by regulators. A few other small Chinese exchanges see hope in the route taken by Binance and are looking to launch themselves overseas to cater to a wider range of customers.
ImToken, a crypto wallet service, stated that the day China started to crack down on crypto facing companies, they saw nearly 10 million users transfer over $66 million Tether into their ImToken wallet, which they claim was double their usual volume.
Justin Sun, the ever-optimistic marketing aficionado that runs TRON and now probably Poloniex too, told Bloomberg that the current environment in China is positive in the long term.
China’s Effect on Crypto
A lot of people are usually left wondering why Chinese regulation has such an astounding effect on the cryptocurrency market. After all, we do claim that Bitcoin and other permissionless networks are free from regulatory scrutiny and will thrive no matter what.
The narrative that China tanks the crypto market does make sense given that a majority of Bitcoin mining farms are located in the country. Additionally, a lot of investment activity could potentially stem from China, and a trading ban may have hindered their ability to deploy capital.
Nevertheless, it is a recurring trend to see news of global – or United States – regulation having little to no effect on Bitcoin price action, while Chinese regulation routinely moves the market – mostly in a negative way.