A year ago, Chinese financial regulators in Beijing and Shanghai started
seriously looking into whether mandates relating to anti-money laundering and
capital control were being adhered to by the country's crypto exchanges. The
regulators were also interested in getting a better sense of how popular
cryptocurrency trading has become in China, how the Bitcoin world works,
how money is made, where it originates and where it is funneled.
Throughout last year, the People's Bank of China (PBoC) was seeking a
better understanding of the industry and according to Robin Zhu, COO at
Huobi, it had been requesting data on user numbers and trading volume as
well as information on global governmental policies relating to
cryptocurrencies. Then, in September, the PBoC announced its ban on ICOs
and on domestic fiat currency to cryptocurrency order book trading.
Trading volumes dropped to less than 10% of their previous numbers by
November 1 st and nerves were rattled. Even so, the exchanges were not
deterred. The common feeling has been that the Bitcoin revolution is here to
stay, and while complying with regulation, exchanges are not going anywhere.
The belief is that the Chinese ban will inevitably be lifted, particularly
considering that Chinese exchanges like OKCoin and Huobi, have some of
the largest cryptocurrency trading volumes in the world. These companies are
hiring at a rapid rate and seeing incredible growth in OTC trading.
Huobi is currently opening new exchanges in Japan and South Korea and is
already examining the complexities relating to compliance issues within the
US market, in preparation for a potential American cryptocurrency exchange.
In fact, most of Huobi Pro's three million crypto exchange users, are not from
China.
The company's Etherium blockchain based token, the HT has been incredibly
successful. Huobi decided to give it for free to users who buy platform service
fee packages. Another recent initiative is its HADAX project, an exchange
where users vote, using HT on which new currencies are worth trading and
should be listed on the platform. This endeavor has already collected 8.5
million HT from 85 million votes.
While the PBoC has presented certain obstacles to the cryptocurrency
industry, it has clearly not shut the door on this increasingly popular form of
trading.
One new exchange that seems to prove this point is Binance, the brainchild of
OKCoin executives He Yi and Zhao Changpeng, which emerged in July 2017,
not long before the Chinese ban. However, since the company was based
outside the borders of mainland China, Binance was perfectly positioned to
take advantage of events as they unfolded, when amid all the uncertainty,
Chinese investors were withdrawing their cryptocurrency and transferring it to
foreign platforms.
Now 7 months old Binance is one of the main crypto exchange players seeing
over a billion in daily trading volume. While having stated that the company
would limit access for those within mainland China, use of a VPN to
circumvent the law is not unheard of and for Binance users, it seems that
where there's a will there's a way.
All in all, ban or no ban, crypto exchanges in China are not only keeping their
heads above water but riding a wave of unprecedented success.