China officially banned cryptocurrency exchanges after announcing it was considering the move back in September.
The last digital currency exchange in China was shut down as of November 1. With that final closure, the exchange of digital currencies in China officially became illegal. However, that’s not to say that Chinese investors are not involved in the cryptocurrency space, only that they have been forced to look to other areas for their trading.
Servers Were Moved Abroad
One way that cryptocurrency exchanges in China have saved themselves is by shuttering their operations in the country and moving elsewhere. Huobi, one of the top three platforms for bitcoin trading, moved its base to Singapore, Hong Kong, and South Korea, according to a report by Forbes.
BTCC, another top exchange that was previously headquartered in Shanghai, planned to charge users a service fee in order to withdraw existing funds in the days preceding the ban.
Exchanges and ICOs Banned
China did not just close down cryptocurrency exchanges. Government regulators also shut down the ICO market.
This was a major blow to tech companies bolstered by blockchain and the cryptocurrency space. Still, Chinese investors looking to move into the initial coin offering space could buy up tokens using offshore accounts.
Digital assets exchange C2CX suggested that the Chinese ban may not impede the cryptocurrency market much at all.
“None of the exchanges previously based in China ceased business. They simply moved their servers abroad,” said Scott Freeman, CEO of C2CX. “The only change is that for the moment, the funds will move in and out of local currency via P2P transactions instead of via direct deposit. From a regulatory perspective, this is an inferior solution because it’s much harder to prevent money laundering.”
Ironically, Chinese regulators cited concerns about money laundering and illicit activity as reasons for why they shuttered digital currency exchanges in the first place. Nonetheless, the fact that the cryptocurrency world is largely decentralized means that many investors are predicting it will just find a way around the Chinese ban.
Investors who are determined enough to continue to place their assets in the highly volatile and fast-moving cryptocurrency market will find a way to do so, even if it is through semi-legal and non-official pathways. In spite of the ban on exchanges and ICOs, the Chinese government indicated it will continue to explore blockchain technology developments.