Exchanges serving Chinese users are feeling pressure after intensified crackdowns by the People’s Bank of China last month
KuCoin has joined the growing list of cryptocurrency platforms suspending services for users in mainland China. The company said it has decided to comply with an order from the People’s Bank of China (PBoC) that deems digital currency trading illegal. Late last month, the central bank coordinated a directive with nine other government agencies demanding a halt to crypto-related activities, citing crime and fraud risks associated with cryptocurrencies.
Founded in 2013, KuCoin informed its Chinese users on October 3 that they must close all open positions and withdraw funds from exchange wallets by the end of the year. The company said it will send periodic email reminders to affected users through the December 31 deadline. KuCoin also stated that, following an internal review prompted by the government order, exiting the Chinese market is the best option for the exchange.
This year the Chinese central bank has been tightening the screws on crypto firms operating in China. As the digital yuan (China’s CBDC) advances, regulators have intensified restrictions on other cryptocurrencies. The crackdown has extended beyond trading — the government also targeted mining, citing environmental concerns.
KuCoin’s announcement follows a notice from Huobi issued about a week earlier. Huobi told the public it will no longer accept new users from mainland China and plans to gradually close all active accounts by December 31. Since that notice, Huobi has moved roughly 100,000 bitcoins from its mining pool in an effort to raise about $4 billion in funds that are intended to cover customer withdrawals.
“Huobi Global will gradually withdraw existing user accounts in mainland China by 24:00 (UTC+8) on December 31, 2021, to ensure the safety of user assets. We will inform users of specific arrangements and details via official announcements, emails, and in-app messages,” the company said.
Huobi has already begun relocating portions of its operations to reduce its footprint in China, and observers expect the exchange to shift focus to crypto-friendly jurisdictions such as Singapore. In addition to Huobi, Binance has also announced it will stop accepting registrations from Chinese mobile numbers and that the Binance app is no longer available in the region.
“Binance takes its compliance obligations very seriously and is committed to adhering to local regulatory requirements wherever we operate,” a Binance spokesperson told CNBC.