The People’s Bank of China (PBoC) has announced that Bitcoin trading with the Chinese Yuan (CNY) has fallen to less than 1% of Bitcoin’s total global fiat volume. This is a drastic change from when CNY to Bitcoin trading comprised over 90% of global fiat trading volume at peak levels. This data suggests that the cryptocurrency trading ban has been effective.
In September 2017, China made it illegal to trade CNY for cryptocurrency and simultaneously prohibited initial coin offerings (ICOs). This caused a drastic change since prior to the ban, China had been the global hub for cryptocurrency trading, with the highest volume of cryptocurrency exchanges in the world and by far the most Bitcoin mining.
The Chinese government allowed 88 cryptocurrency exchanges and 85 ICO trading platforms zero-risk exit plans for leaving China. Huobi, Binance, and OKCoin, among the biggest cryptocurrency exchanges in the world, ceased CNY trading which temporarily stifled their operations. Huobi and Binance have actually thrived since the ban, opening cryptocurrency exchanges in multiple countries; they now rank in the top 3 out of all global cryptocurrency exchanges. Huobi moved its headquarters to Singapore and has just opened cryptocurrency exchanges in Australia and the United States with plans to open another exchange in London by the end of 2018. Binance has set up offices and a bank account in Malta, and has already used that bank account to open a fiat to crypto exchange in Uganda, with plans to launch more exchanges in different countries.
OKEx, which is headquartered in Hong Kong and was started by OKCoin’s CEO Star Xu, is also among the top 3 cryptocurrency exchanges. In general, Hong Kong has become the Chinese hub for cryptocurrency activity since it has an autonomous government that is far more favorable towards cryptocurrency than the rest of China. The biggest Bitcoin mining manufacturer in the world, Bitmain, is headquartered in Hong Kong and has a valuation of USD 12 billion. Bitcoin mining activity was largely unaffected by the ban, and China continues to be the global leader in the crypto mining industry.
Ultimately, the Chinese cryptocurrency trading ban appears to have had beneficial effects, since it has led to an overall decentralization of cryptocurrency trading activity. Cryptocurrency and Bitcoin trading was becoming extremely concentrated in China, but the ban forced this activity to scatter across the globe.
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