Binance, the world’s largest cryptocurrency exchange that has attracted multiple warnings from regulators, said it would stop offering its peer-to-peer trading service in China by the end of 2021 in a move that would represent a clean break from a market it largely withdrew from in 2017.
The move was made “in response to regulatory and policy demand”, the company said in an announcement on its website on Wednesday. The peer-to-peer service has enabled mainland China residents to buy and sell digital currencies bilaterally using fiat currencies such as the yuan, even though Binance all but quit China in 2017 after the government cracked down hard on cryptocurrency exchanges that year.
“Since 2017, Binance has not been engaged in the exchange business in China,” it said on its website, adding that it had been focused on fulfilling its compliance obligations.
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Binance’s move comes after the People’s Bank of China (PBOC) warned recently that any foreign cryptocurrency exchange that provides services to Chinese citizens through the internet is engaged in illegal financial activities.
Any people or organisations providing sales and marketing, payment settlement or technical support “who knowingly or should know that they are engaged in virtual currency related business” will be investigated in accordance with the law, the central bank said.
For Binance, which ranked as the biggest exchange among close to 300 tracked by CryptoCompare, China is just one of over 180 jurisdictions it has been providing services to.
Founder and chief executive Zhao Changpeng said in an interview with the Post in September that the top priority for the exchange is to get licences in markets that are ready to regulate the US$2 trillion cryptocurrency sector. Its most obvious attempt so far has been in Singapore, where it has applied for a Payment Service Provider licence that would enable it to offer exchange trading services in the city state.
“As the largest player in the industry, we need to prepare ourselves for the shift. We are making changes to make it easier to work with regulators,” said Zhao, referring to the sweeping changes that Binance has made internally for the purpose of winning regulators’ approval for licences.
The exchange, which has been hit by numerous regulatory warnings this year including in the UK, Hong Kong, Japan, Singapore and Italy, stopped offering its derivative trading service in Hong Kong in August. That came after the Securities and Futures Commission issued a warning in July stating that Binance was not licensed or registered to offer securities, a regulated activity in the city.
Binance is far from the only cryptocurrency business affected by the latest PBOC clampdown.
Another exchange, Huobi, has also stopped registering new mainland Chinese users since September. Some miners such as SparkPool which is one of the world’s largest Ethereum mining pools, as well as intermediary information and data providers, have also fled.
Another firm, OKEx, said it intends to cease its Chinese operations which, according to people close to the exchange, include sales, technical support and business development.
“The mobile app of OKEx has [disabled] its respective marketplaces applicable to China [users],” it said in a statement posted on its website Wednesday. “OKEX will press on with its policy to exit the market of mainland China, and refrain from setting up offices there.”
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved.
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