China To Crack Down On International Cryptocurrency Trading By Its Citizens

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China To Crack Down On International Cryptocurrency Trading By Its Citizens

After cracking down on domestic cryptocurrency trade, China is now attempting to do the same with foreign crypto trading by its people. China will “boost up” attempts to eliminate offshore platforms for virtual currency trading or ICOs, according to a news story in the South China Morning Post, a government-run magazine. In other words, the government intends to prohibit its residents from trading cryptocurrencies on foreign exchanges or participating in initial coin offerings hosted elsewhere.

Last year, the Chinese government prohibited cryptocurrency exchanges from operating inside its borders. (See also: China’s Cryptocurrency Exchanges Are Dead.) As a consequence of the ruling, some cryptocurrency exchanges established in the nation migrated to neighboring countries or started serving overseas consumers. While specific data are lacking, the prohibition seems to have had little impact on trade. (For more information, see China’s Cryptocurrencies Have Gone Underground.)

Domestic users started trading on the new exchanges by utilizing virtual private networks (VPNs) to evade government-controlled gateways and connect to exchanges in Hong Kong, Japan, and South Korea. All three sites consistently have the highest cryptocurrency trading volumes. In reality, Hong Kong-based Binance has risen to become one of the world’s top three exchanges in terms of trading volume. It was also stated that it was gaining 200,000 new members per hour.

While specific numbers on Chinese citizens trading are unclear, the government-controlled publication offered an indication of the scope of the issue. Following the restriction, “many users moved to international sites to continue engaging in virtual currency transactions,” according to the website. “Risks persist, spurred by unlawful issuance, fraud, and pyramid marketing,” according to the report.

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China’s move to tighten curbs on cryptocurrencies comes amid a global crackdown on the asset class. South Korea is thought to be exploring legislation, even as Japan tightens controls on exchange operations in the aftermath of the Coincheck breach. China has a big impact on bitcoin pricing due to its many trading activities and miners. (See also: Is China Totally Dependent On Bitcoin And Crypto Prices?)

According to the South China Morning Post, the country’s action would assist Japanese and South Korean exchanges since investors will relocate their trading activities to capitalize on bitcoin volatility. The cryptocurrency markets have seen a sustained downturn in response to the fear of increasing regulation. Over the weekend, the markets lost almost $60 billion in value. (Read more: Bitcoin Price Drops Below $8,000, Down 42% Since Year’s Beginning.)

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is very dangerous and speculative, and this article is not a suggestion by Investopedia or the author to do so. Because every person’s circumstance is different, a knowledgeable specialist should always be contacted before making any financial choices. Investopedia makes no guarantees or warranties about the accuracy or timeliness of the information provided on this site. The author holds a minor quantity of bitcoin as of the day this article was published.

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