After a careful internal review, cryptocurrency exchange KuCoin concluded that exiting China is the only viable option. Many governments agree the hostility of the country to cryptocurrencies seems related to the launch of the digital yuan.
The KuCoin exchange recently announced that its users residing in China would have to withdraw their funds and close their accounts by the end of the year. The direct reason for that was the latest regulatory series of decisions by the People’s Bank of China on cryptocurrencies.
Regulatory pressures from Chinese authorities led the exchange to ask its users to close their current positions. In addition, investors will need to withdraw the remaining funds from the platform before December 31st of this year.
At the end of September, the Central Bank of China decreed a ban on cryptocurrencies. The financial institution prohibited all organizations operating in the territory from trading with any entity associated with the cryptocurrency industry.
KuCoin said that it had initiated an internal review to determine the most appropriate action to take. After careful study, the company concluded that the only viable option was to get out of China.
After Huobi, that is the second exchange to announce similar plans after the latest bans by China.
Huobi said that it would stop accepting new users residing in China. The company’s mining pool then moved more than USD 4 billion worth of Bitcoin to overseas wallets. That also seemed a direct consequence of Chinese regulations.
The Chinese Regulatory Measures Have Affected the Bitcoin Market
China’s most recent regulatory measures have impacted the overall cryptocurrency market. In addition, the financial crisis due to the possible default of the real estate giant Evergrande seems to have affected the price of Bitcoin.
Recent events have also affected Ethereum, as Ether’s mining pool, Sparkpool, had to close. The pressure from regulators forced it to end its operations and leave the Chinese territory.
The Digital Yuan Appears to Be the Reason for the Chinese Regulations
Many governments believe that China’s hostility to cryptocurrencies seems to be due to the launch of its digital currency, the digital yuan.
Carnegie Mellon University economics professor Ariel Zetlin stressed that China wants to promote the digital yuan. He stated that they also seek to eliminate their competitors by banning cryptocurrency activities and exchanges.
The president of the CrossTower cryptocurrency exchange Kristin Boggiano said that China seems to be choosing control over innovation. Furthermore, she explained that their actions indicate that they view cryptocurrencies as a threat to the digital yuan.
That shows the suspicions that have led China to tighten its regulations on decentralized cryptocurrencies. That contrasts with other large economies, where the discussion continues revolving around the safety and reliability of those assets.
Hence, that strategy could be an effort to stop the growth of private cryptocurrencies. In that way, they would be looking to encourage users in China to adopt the digital yuan.
By Alexander Salazar