Following the cryptocurrency crackdown in South Korea last week, the Chinese government is now targeting websites and mobile apps that offer cryptocurrency trading services. This is not the first time the global superpower has decided to ban cryptocurrencies; just last year, in September 2017, China issued a nation-wide clampdown on cryptocurrency exchanges, forcing the majority of traders to transfer their funds over to offshore platforms in order to keep trading.
However, recently, the uptick in cryptocurrency trading activity in alternate venues has caught the attention of the Chinese government. According to Bloomberg, the country is planning to block domestic access to homegrown and offshore platforms that enable centralized trading. Nevertheless, there is still a huge gray area around the term, as there is no umbrella definition as to how authorities define such “platforms”.
According to a reliable source familiar with the situation in Beijing, authorities will also target individuals and companies that provide market-making, settlement and clearing services for centralized trading. “However, small peer-to-peer transactions aren’t being targeted”, they also said, without describing the plan in full detail.
History Repeats Itself
China, which has the second largest economy in the world, created waves of Fear, Uncertainty, and Doubt (FUD) in the cryptocurrency world when they announced that they were banning Initial Coin Offerings (ICOs) – a way for new cryptocurrencies to raise funds through a public crowd-sale – and shut down all cryptocurrency exchanges in mainland China.
The world of digital currencies is facing a similar situation right now, following rumors of the South Korean government banning all cryptocurrency trades. Last week, the market faced a substantial loss, with some major coins like Ripple shedding up to 50% of its original value. Bitcoin, too, lost nearly 13% in value, but it made a recovery on Monday, trading 4.78 percent higher on CoinDesk at $14,269.80 a coin. Compared to that, the “market crash” last fall was way worse; after China announced its clampdown on Bitcoin and other cryptocurrencies, the price of Bitcoin plummeted from a high of $4,857 to $3,260 – a 32.8% drop in value.
Up until last year, China was one of the most active markets for Bitcoin and cryptocurrency trading, as it was home to some of the world biggest mining factories. Unfortunately, all this took a turn for the worse after the crackdown, and the miners were forced to move their operations offshore as local authorities called for curbs on the industry.