Fallout from China’s ban on all crypto transactions

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Yahoo Finance Jennifer Schonberger breaks down the latest developments in the crypto market amid China’s crackdown on cryptocurrency.

Video transcript

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ALEXIS CHRISTOFOROUS: Welcome back. Beijing’s new blanket ban on all cryptocurrency trading and mining has prompted crypto exchanges and service providers to scramble to sever trade ties with customers in mainland China. Jennifer Schonberger from Yahoo Finance here now with more on this. Jennifer?

JENNIFER SCHONBERGER: Hello, Alexis. That’s right. Global cryptocurrency exchanges that serve China are quickly pulling out of the mainland after authorities cracked down on crypto last Friday, claiming all crypto activity is illegal. Huobi Global and Binance, two of the largest global exchange exchanges preferred by Chinese users, have stopped allowing new clients to open accounts. Now, Huobi is also expected to phase out existing customer accounts by the end of this year.

Meanwhile, Token Pocket, which offers crypto wallets to users, has reportedly told current users that it will no longer offer a service to those operating in mainland China so as not to break the laws of Chinese authorities. Today, Perianne Boring, founder and president of the Digital Chamber of Commerce, told me in a statement that the CPC is launching its own digital yuan.

And their strategy includes restricting access to open source cryptocurrencies. This is an opportunity for the United States to take the lead in this technological frontier. We urge our policymakers to promote policies that encourage the further development of blockchain technology in the United States.

And while it looks like a rush despite these moves, many companies and cryptocurrency exchanges have already moved most of their business outside of mainland China. This is because those actions that took place on Friday were the latest in a long string of actions dating back to 2013. In 2017 alone, cryptocurrency trading was banned in China. And this summer we saw the crackdown on crypto mining.

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Now, I just want to point out to viewers that the measures taken by the authorities apply to overseas exchanges, global cryptocurrency exchanges that serve users on the Chinese mainland, which is why we are assisting today in the rush of these global stock exchanges to remove and siphon off the bonds. Alexis, back to you.

ALEXIS CHRISTOFOROUS: So Jennifer, will China’s approach set a standard for how other countries approach the regulation of the crypto space?

JENNIFER SCHONBERGER: Yes, the short answer is no. The Chinese economy, the way the authorities regulate the Chinese economy is very different from the US economy and many other economies in the world. China wants to control its economy. They want to nationalize crypto. And to the extent that you have these private currencies going around creating potential speculation in their economy, they want to suppress that.

And so they’re really looking to digitize the yuan. They are the first to launch the central bank’s digital currency in order to be able to track the transactions of Chinese citizens. So that is certainly not the case here in the United States. Authorities here in the United States, SEC Chairman Gensler understands that there is validity here. There is innovation here. But regulators here also want to create rules for the road so clients don’t get ripped off and investors are protected from losses.

ALEXIS CHRISTOFOROUS: Okay, Jennifer Schonberger, thank you very much for breaking down everything that’s going on in the crypto world regarding China right now.

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