Bitcoin holders in China and Hong Kong scramble to protect crypto assets

Bitcoin ATM in Hong Kong.

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Some crypto holders in China and Hong Kong are looking for ways to protect Bitcoin and other cryptocurrencies after the central bank of China released a new document on Friday. Related transactions.

Bitcoin fell 6% and ether fell 10% as investors digested the news as sales spread early on Friday.

“Since the announcement within two hours, I have already received emails and phone calls from Chinese crypto holders looking for solutions on how to access and protect their crypto holdings on foreign exchanges and cold wallets. We received more than 12 messages, including crypto apps, “said David Resperance, a Toronto-based lawyer who specializes in moving wealthy crypto holders to other countries to save taxes. , Told CNBC at the beginning of Friday.

According to Resperance, the move is an attempt to freeze crypto assets so that owners can’t do anything legally. “In addition to being unable to do anything with highly volatile assets, I suspect that the Chinese government, like Roosevelt and gold, will” propose “to convert to RMB at fixed market prices in the future. increase. “He said.

“I had for some time predicted this as part of a move by the Chinese government to end all potential competition with the next digital source,” Resperance said.

The People’s Bank of China said on its website on Friday that all cryptocurrency-related transactions in China, including services provided by offshore exchanges, are illegal. According to PBOC, services that provide cryptocurrency trading, order verification, token issuance, and derivatives are all strictly prohibited.

The directive targets over-the-counter (OTC) platforms such as OKEx that allow Chinese users to exchange fiat currencies for crypto tokens. An OKEx spokesman told CNBC that the company is investigating the news and will notify CNBC when it decides on the next step.

Resperance claims that some of his clients are also worried about their safety.

“They are personally worried because they suspect that the Chinese government is familiar with their previous crypto activity and do not want to be the next Jack Ma like the goal of” common prosperity “. Resperance said he helped clients expatriate to avoid taxes as cryptocurrencies crack down in the U.S.

That said, authoritarian nations often oppose digital currencies.

In 2013, the country ordered third-party payment providers to stop using Bitcoin. Chinese authorities have stopped selling tokens in 2017 and have promised to continue targeting crypto exchanges in 2019. And earlier this year, the collapse of China’s crypto mining industry has darkened half of its Bitcoin network for months.

“Today’s notice is nothing new, not a policy change,” said Boaz Sobrado, a London-based fintech data analyst.

But now, the cryptocurrency announcement involves 10 institutions, including key departments such as the Supreme Court, the Supreme People’s Procuratorate, and the Ministry of Public Security, demonstrating greater unity among the country’s top brass. The Department of Foreign Exchange also participated, which may indicate that enforcement in this area may increase.

Signs of adjustment

There are other signs of early government adjustments in China. The PBOC document was first released on September 15th, and a document banning all cryptocurrency mining by the National Development and Reform Commission of China was released on September 3rd. Both were published on the official government platform on Friday, suggesting cooperation among all participating institutions.

Also, unlike previous government statements that mention crypto in the same language, this document specifically mentions Bitcoin, Ethereum, and Tether as Stablecoin is beginning to enter the Chinese regulatory agency Lexicon. Is mentioned.

Mark Peikin, CEO of Bespoke Growth Partners, said this was the beginning of widespread short-term pressure on the prices of Bitcoin and other cryptocurrencies: “The risks faced by Chinese investors have significant spillover effects and are immediate. Trading in the US crypto market, which we believe will lead to risk-off. “

“Chinese investors have been cold-headed by the Chinese government’s latest and greatest crackdown on cryptocurrency trading in recent months, but it may no longer be warlike,” Peykin told CNBC. rice field.

“So far, Chinese investors have largely circumvented the ban by separating transactions. Banks have reached an agreement on transaction prices using domestic OTC platforms or more and more recent offshore outlets. Or we used the FinTech platform to transfer RMB payments, “continues Peikin. ..

However, given the recent order that PBOC has improved its ability to monitor crypto transactions and fintech companies, including Ant Group, will not offer crypto services, Peikin said that this workaround used by Chinese investors is It states that it will gradually become a narrow tunnel.

Friday’s statement from PBOC will be added to other news from China this week that has upset the crypto market. The liquidity crisis of the China Evergrande Group, a real estate developer, has raised concerns about the expansion of the real estate bubble in China. The fear spread throughout the world economy, leaving the prices of many cryptocurrencies in the red.

However, not everyone is convinced that this downward pressure on the crypto market will continue.

Sobrado believes the market is overreacting to Friday’s announcement from PBOC, given that many of China’s exchanges are decentralized and peer-to-peer (P2P). Token exchange P2P does not circumvent regulatory scrutiny, but Sobrado says it is difficult to track these crypto exchanges.

Resperance also points out that Friday’s news could actually strengthen the crypto business case as an asset class because it is a hedge against sovereign risk.

After all, the biggest question is whether this latest directive from Beijing has teeth. “The joke about cryptocurrencies is that China has banned cryptocurrencies hundreds of times,” Sobrad said. “I’m willing to bet that people will trade Bitcoin in China a year from now.”

Bitcoin holders in China and Hong Kong scramble to protect crypto assets

Source link Bitcoin holders in China and Hong Kong scramble to protect crypto assets

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