Last week, news surfaced that China had banned financial institutions in the country from offering Bitcoin services and that it will be cracking down on mining. Many in the Bitcoin community (this publication included) met the news with rolling eyes — China has historically “banned” its businesses from using Bitcoin many times with little impact and it’s also not technically possible to outright ban Bitcoin from personal use.
However, it’s clear that this latest regulatory measure is having a very tangible impact on the Bitcoin ecosystem as miners and exchanges based in the country are limiting or putting an end to their Bitcoin-focused activities.
Bitcoin mining businesses BTC.TOP, HashCow and Huobi Mall, for instance, have all reacted to the latest ban. Huobi Mall has reportedly suspended cryptocurrency mining that serves Chinese clients, BTC.TOP has suspended its China-based business and HashCow will stop buying new bitcoin mining rigs, per Reuters.
“On Sunday, [bitcoin] prices slumped as ‘miners,’ who mint crypto by verifying transactions, halted Chinese operations in the face of increased scrutiny from authorities,” Reuters reported. “The trigger for the initial crypto selloff appeared to come from toughening language from Chinese regulators.”
The bitcoin exchange landscape appears to be in line for significant change as well. Those operating in Hong Kong, at least, will now be required to obtain a license from the city’s market regulators and will only be allowed to provide services to professional investors.
“Dozens of cryptocurrency exchanges operate in Hong Kong, including some of the world’s largest,” according to a follow up Reuters report. “According to Hong Kong law, an individual must have a portfolio of HK$8 million ($1.03 million) to count as a professional investor.”
While Bitcoin is not dependent on the approval of any government or other third party to function, it appears that China’s latest regulations will be changing the landscape of Bitcoin business, at least in the short term.