Bitcoin holders in China and Hong Kong scramble to protect crypto assets

Texas News Today

Bitcoin ATM in Hong Kong.

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After China’s central bank released a new document on Friday, some crypto holders in China and Hong Kong are looking for ways to protect bitcoin and other cryptocurrencies. related transactions.

Bitcoin is down 6% and Ether is down 10% as investors digest the news as the selloff spread early Friday.

“Within two hours since the announcement, I have already received emails and phone calls from Chinese crypto holders looking for solutions on how to access their crypto holdings on forex and cold wallets and their Protect. We received over 12 messages, including crypto apps,” said David Resperance, a Toronto-based attorney who specializes in moving wealthy crypto holders to other countries to save on taxes. , told CNBC early Friday.

According to Respense, the move is an attempt to freeze crypto assets so that the owners cannot do anything legally. “Apart from being unable to do anything with highly volatile assets, I suspect that the Chinese government, like Roosevelt and gold, will propose converting to RMB at fixed market prices in the future”. Growth. “He said.

“I had predicted this for some time as part of a move by the Chinese government to eliminate all potential competition with the next digital source,” Resperance said.

The People’s Bank of China said on its website on Friday that all cryptocurrency-related transactions are illegal in China, including services provided by offshore exchanges. According to the PBOC, crypto trading, order verification, token issuance and derivatives services are all strictly prohibited.

The directive targets over-the-counter (OTC) platforms such as OKEx that allow Chinese users to exchange fiat currencies for crypto tokens. An OKEx spokesperson told CNBC that the company is investigating the news and will notify CNBC when a decision is made on the next steps.

Resperance claims that some of their clients are also concerned about their security.

“They are personally concerned because they suspect that the Chinese government is familiar with their past crypto activity and does not want to be the next Jack Ma with the goal of “general prosperity.” Migrants helped as cryptocurrency cracks in the US

That said, authoritarian nations are often opposed to digital currencies.

In 2013, the country ordered third-party payment providers to stop using bitcoin. Chinese authorities stopped selling tokens in 2017 and have promised to continue targeting crypto exchanges in 2019. And earlier this year, the collapse of China’s crypto mining industry has blacked out half of its bitcoin network for months.

“Today’s notice is nothing new, nor a policy change,” said Boaz Sobrado, a London-based fintech data analyst.

But now, the cryptocurrency announcement involves 10 institutions, including key departments such as the Supreme Court, the Supreme People’s Procuratorate and the Ministry of Public Security, demonstrating greater unity among the country’s top officials. The Foreign Exchange Department also participated, which could indicate that enforcement may be increasing in this area.

adjustment signal

There are other signs of early government adjustments in China. The PBOC document was first issued on 15 September, and a document banning all cryptocurrency mining by the National Development and Reform Commission of China was issued on 3 September. Both were published on Friday on the official government forum, suggesting collaboration between all participating institutions.

Furthermore, unlike previous government statements that mentioned crypto in the same language, this document specifically mentions Bitcoin, Ethereum and Tether as stablecoins begin to enter the Chinese regulatory agency lexicon. is mentioned.

Mark Peikin, CEO of Bespoke Growth Partners, said this was the beginning of widespread short-term pressure on the prices of bitcoin and other cryptocurrencies: “The risks faced by Chinese investors have significant spillover effects and are immediate. , which we believe will be risk-off.”

“Chinese investors have been chilled by the Chinese government’s latest and greatest crackdown on cryptocurrency trading in recent months, but it may no longer be warlike,” Pekin told CNBC. Rice field.

“So far, Chinese investors have largely circumvented the ban by liquidating transactions. Banks have settled on transaction prices using domestic OTC platforms or, more recently, offshore outlets. Or we used fintech platforms to transfer RMB payments,” continues Paykin. ..

However, given the recent order that PBOCs have improved their ability to monitor crypto transactions and that fintech companies including Ant Group will no longer offer crypto services, Peikin said that this workaround used by Chinese investors would be Tells that it will gradually become a narrow tunnel. .

Friday’s statement from PBOC will be added to other news from China this week that has troubled the crypto market. The liquidity crisis at China Evergrande Group, a real estate developer, has raised concerns about the expansion of the real estate bubble in China. Fear engulfed economies around the world, causing the prices of many cryptocurrencies to turn red.

However, not everyone is convinced that this downward pressure on the crypto market will continue.

Sobrado believes the market is overreacting to PBoC’s Friday announcement, noting that many exchanges in China are decentralized and peer-to-peer (P2P). Token exchange P2P does not bypass regulatory scrutiny, but Sobrado says these crypto exchanges are difficult to track.

Resperance also pointed out that Friday’s news could indeed strengthen the case for cryptocurrency business as an asset class as a hedge against sovereign risk.

After all, the biggest question is whether this latest directive from Beijing has merit. “The joke about cryptocurrency is that China has banned cryptocurrencies hundreds of times,” Sobrad said. “I’m willing to bet people will be trading bitcoin in China a year from now.”

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