Major crypto exchanges start cutting off Chinese users after Beijing bans all crypto activities

Cryptocurrency exchanges have begun cutting links with customers in China after Beijing declared more activities related to digital coins “illegal” last week, in its latest broadside against the virtual currency industry.

Huobi, one of these exchanges, said on Sunday that it would end account registrations for new mainland Chinese users. The company will also gradually retire existing accounts of mainland Chinese users by midnight on Dec. 31, 2021.

Meanwhile, Binance, one of the world’s largest cryptocurrency exchanges, said that account registrations using Chinese mobile phone numbers are now blocked. The Binance app is also no longer available for download in China.

“Binance takes its compliance obligations very seriously and is committed to following local regulator requirements wherever we operate,” a spokesperson told CNBC.

Huobi said it had already stopped signing up new Chinese users and “will gradually retire existing mainland China user accounts” by year-end. Digital currency wallet TokenPocket, which is widely used in China, said it would “actively embrace” the latest regulations and would cease supporting some functions in the country. 

Moreover, Alibaba’s site for international buyers said it would stop allowing merchants to sell cryptocurrency mining rigs. Most big crypto equipment makers are Chinese, and global miners have turned to Jack Ma’s e-commerce platform to source the computer gear needed to create bitcoin.

Hong Kong’s biggest cryptocurrency exchange FTX — which was valued at $18 billion after a fundraising round in July — meanwhile announced it had relocated its headquarters to the Bahamas amid growing regulatory restrictions. 

Its founder, 29-year-old Sam Bankman-Fried, wrote on Twitter at the weekend that the Bahamas “is one of the few places to set up a comprehensive framework for crypto”. 

China has historically been a significant market for crypto investment and development as well as a global hotspot for Bitcoin mining, a computational process that creates new units of digital currency. 

But Chinese authorities have embarked on a sweeping crackdown on the crypto industry in recent months, pushing parts of the domestic industry offshore, as regulators have increased pressure on a range of sectors including tech, education, gaming, and real estate. 

The latest restrictions, announced on Friday by the People’s Bank of China and nine other agencies including the internet regulator and police, made it illegal for exchanges to provide services to Chinese users.