by Liu Xin
China’s National Fintech Risk Rectification Office said on August 24 that the agency will block 124 offshore cryptocurrency exchanges from offering trading services to domestic investors. The nationwide crackdown on Initial Coin Offerings (ICOs) is deepening, as multiple Chinese tech companies banned ICO-related businesses and media outlets last week.
On August 21, China’s top social media platform, WeChat, shut down a number of WeChat accounts of media outlets suspected of publishing information on ICOs and cryptocurrency trading. To date, the accounts of well-known Chinese cryptocurrency media outlets such as CoinDaily, Deepchain, Huobi News and Jinse Finance have been shut down. These restrictions have impacted a large number of Chinese readers. For example, CoinDaily claims that its WeChat account boasted over 100,000 followers as of June 2018. Other blocked WeChat accounts were reportedly among the 50 most influential ICO-related accounts on the platform.
Furthermore, Alibaba’s AliPay and Tencent’s WeChat Pay took measures two weeks ago against cryptocurrency trading. In April, Taobao, Alibaba’s online shopping site, banned ICO-related products and services from its site.
The downturn for cryptocurrency trading came after September 2017 when seven Chinese government departments led by the Chinese Central Bank jointly issued the “Announcement on Preventing Financial Risks from Initial Coin Offering.” The announcement required the shutdown of all domestic RMB and Bitcoin trading services. Three leading Chinese cryptocurrency trading platforms, Bitcoin China, OKCoin, and Huobi ended their trading businesses within two months of the announcement.
Since the official crackdown on ICOs, cryptocurrency trading businesses in China have been moving outside the country’s borders. Huobi, currently the world’s third largest cryptocurrency exchange platform by daily trading volume, has been rapidly expanding overseas since it terminated its operations in China in September 2017, as it has launched a South Korean subsidiary and a London-based operation. Several other Chinese exchanges have also been rushing offshore, including OKCoin, which founded a subsidiary in South Korea in March.
Further tightening domestic ICO regulations is China’s answer to cryptocurrency trading businesses going offshore. To top it off, Beijing banned all hotels in its Chaoyang District from hosting cryptocurrency events on August 22.