Friday, July 1

Fiat on-ramps go dry in China, crypto topics censored on social media – Cointelegraph Magazine

This weekly roundup of news from mainland China, Taiwan, and Hong Kong attempts to collect the most important news in the industry, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.

This week, China has returned to work after week-long National Day celebrations, an event that is always filled with flag-waving, military parades and enthusiastic nationalism. This year’s version was intensified by the recent homecoming of Huawei executive Meng Wanzhou after three years in detention in Canada, as well as rising tensions in the Taiwan Strait. Government regulators have spent the better part of the last half year eliminating the cryptocurrency industry on the mainland, a topic that has given the Shanghai Man plenty to discuss in this weekly column.

Limited access to markets

On Wednesday, Binance took a step toward compliance by announcing that it would be closure P2P for RMB markets. According to the announcement on the Binance website, the switch will occur on December 31, 2021. In the meantime, it will search for users from mainland China and switch their accounts to a withdrawal-only mode. At the same time, users will only be able to withdraw, close positions and other essential functions. Binance will notify the relevant users by email 7 days prior to the account change.

The closure of the RMB P2P markets makes owning cryptocurrencies a little more risky in China

The news was not well received by the remaining retail incumbents, who feel there are fewer and fewer reliable exit ramps available without resorting to more drastic measures such as offshore accounts. Binance had been one of the most popular P2P markets, due in large part to the exchange’s reputation, its liquidity, and Binance’s geographical distance from Beijing. Binance has always maintained that its website was blocked in China and that it does not have an exchange commercial presence here, thus it was exempt from mainland China regulatory policy.

There is no denying that the lack of P2P fiat options will make investing in cryptocurrencies much less comfortable for Chinese citizens living in mainland China. With central bank digital currency eCNY just around the corner, stricter fiat regulations could make it difficult for large amounts of fiat money to enter and exit crypto markets. On the other hand, many people are less concerned, knowing that OTC markets will emerge whenever there is an opportunity to provide an on-demand service. Technology always has a way of developing where it is most needed.

Reading between the lines

The movement looks pretty severe on paper, but there are still some gray areas that need to be examined. It’s no secret that earlier this year millions of Chinese users signed up on major exchanges and many of them were active traders and large holders. Some of them are likely to be deterred by recent government policies and currency regulations, and reduce their exposure to the asset class. Others are being actively funneled into DeFi, as evidenced by increasing on-chain trade volumes coming from China.

Other users will simply choose to wait, especially considering the rapidly changing nature of national policies. A common belief is that exchanges that choose to self-regulate may not enforce this policy very strictly at first. This is supported by a lack of clarity on how overseas Chinese users should be treated. Users can circumvent the rules entirely by providing proof of international residency or alternative forms of identification. The silver lining here is that any selling pressure caused by uncertainty or fear from Chinese investors will be dampened by a long compliance transition period.

For a company that operates entirely outside of China, it is very difficult for regulators to enforce policies, especially if the exchange claims to self-regulate, banning IPs and not accepting new Chinese registrations. This is the strategy that exchanges like OKEx and seem to be following, as these two big platforms with Chinese roots announced that they were already fully compliant, did not accept Chinese users, and as a result, would not be. making drastic changes.

A prominent social media influencer on Weibo wrote:

“The content of this ad is a bit strange. I think the exchange will do a self-check and try to discover the remaining Chinese users on the platform, but in the case, after the self-check, the exchange announces that there are no Chinese users, the exchange will just leave them there. ”

This post was later removed on Weibo. Currently, all topics related to Binance and other exchanges are censored by social media apps like WeChat.

Waning impact

Perhaps the most surprising conclusion from all this was the market’s indifference to the news. Previous announcements of this magnitude have had very pronounced effects on the market price. On Wednesday, following Binance’s announcement, the price of BTC briefly declined before recovering to over $ 58,000 the next day.

What this shows is that the market is putting less weight on the impact of the news coming out of China, rather than focusing on narratives like the long-awaited ETF approvals in the US and Vladimir Putin’s surprise. admission about cryptocurrencies. Investors can take comfort in the fact that with more growth and decentralization, market risk is more diversified.

The right to enforce

On October 11, the financial magazine Caijing published a history discussing the application of the recent crackdown on cryptocurrencies. The main points were that the recent announcements of the Central Bank were merely indicative and that the actual judicial interpretation and its execution had to come from the prosecution authorities in the judicial system. The article implied that judicial bodies were now investigating the legality of mining and cryptocurrency businesses, and that this could spell trouble for rule breakers. Those who had been successful in circumventing the rules might not be out of the woods yet.

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