China’s largest cryptocurrency operators seek new life in friendlier Asian jurisdictions such as Hong Kong, Singapore, South Korea, and most especially, Japan as the mainland – once a home to the world’s biggest community of Bitcoin miners – cracks down on cryptocurrency activity.
Kicked out of their own territory and forced to shift resources en masse, China’s exchanges and wallet services are now harboring for alternative investments by attracting new customers and staking out other corners of the $170 billion industry in the global market. They are either setting up over-the-counter shops in Hong Kong, planning operations in Singapore and South Korea, or applying for licenses in Japan (whether solo or via partnership).
OKEx (one of the largest bitcoin operators in China backed by OKCoin), for example, is considering going alone in Hong Kong. Because Chinese investors can still buy from individuals who have access to overseas market, OKEx wants “to corral Chinese investors who’ve resorted to peer-to-peer trading over messaging apps like Telegram.” They are expecting to attract customers mostly from China, Russia, and the United Kingdom – as reported by Bloomberg.
Others, like Bitmain (which operates the world’s largest mining collective), are considering Singapore as a backup option and reported that a regional headquarters will be opening there. However, the country is yet to enact specific regulations.
Japan, on the other hand, being one of the early adopters of bitcoin; is fast turning into the world’s hotspot for cryptocurrencies accounting for 40 percent of the total transactions globally. This is mainly because of the country’s favorable policies such as the immediate approval of the domestic financial regulator in September following the crackdown.
Now seen as a safe haven for many operators, there are at least 19 companies applying for a Japanese license – including Binance.com, (Beijing-based) Bixin, and OKCoin.
“We’re talking to almost all of those guys. They’re all desperate now”, Mike Kayamori, head of Tokyo-based Quoine (a bitcoin exchange operator in Japan) told Bloomberg.
The unexpected turn of events made China, known to hate Japan over a number of rivalry issues (i.e. world war, Nanking massacre, and territorial disputes), to unwittingly prompt crypto-marketers to see the bigger picture – saying that,
“Six billion people are always better than 1.3 billion people.”
The crackdown in September, which effectively killed bitcoin trading in China, had no explicit explanation except that “cleansing risk from financial markets” has been the country’s government mantra. Basically, digital currencies pave ways to move money out of China – an addition to the outflows that the government is stemming.
Moreover, according to a joint decree from seven of China’s financial regulators – including the China Banking Regulatory Commission, the People’s Bank of China, the Ministry of Industry and Information Technology, sales of crypto tokens are “unauthorized and illegal public financing activities” which include illegal activities such as distribution of financial tokens, issuance of securities, and fundraising; financial fraud, and pyramid scheme.
As a matter of fact, thousands of criminal cases associated with alternative cryptocurrencies had already been cracked down by the authorities – including those of Onecoin and Ticcoin.
Another problem that cryptocurrency operators are facing is the issue with bitcoin mining’s enormous energy consumption. It has been argued that the said activity should rely on renewable energy which, for countries like China that had previously relied on coal-powered energy, makes perfect sense. Bitcoin enthusiasts suggest that altering the mining process might help – but it gets complicated as it gets.
However, there might still be hope that China is not yet giving up on cryptocurrencies as companies continue to invest heavily in emerging technologies to support financial services. As the initial coin offerings (ICO) are still filled with illegalities, the crackdown might be a means to help clean up the market.
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