A number of major Chinese exchanges have found a way to continue their respective operations, despite the crackdown of the Chinese government on cryptocurrency and cryptocurrency exchange platforms.
Shutdown of 2 Major Chinese Exchanges
On the last day of October, Huobi and Okcoin closed down their operations due to a mandate by the Chinese government. However, with the closing of operations, came an initiation of a P2P trading platform, namely the Huobi Pro.
Meanwhile, Okex, which is an internationally functioning counterpart of the now defunct Okcoin, has officially announced its P2P platform for trading. This platform will accept quite a few fiat currencies, such as CNY.
The natural response to the ban of cryptocurrency in China was the shifting abroad of a number of exchanges, and the launching of various P2P platforms through internationally affiliated companies. This is to ensure that the companies continue to service the Chinese cryptocurrency demand, while at the same time avoiding any backlash from Chinese regulatory authorities.
The Financial Market Director for Okcoin’s counterpart, Okex, says, “Centralized order-book exchange model is still the mainstream among [the] crypto industry. However, the changing regulatory environment brings uncertainties to crypto market. Some of the countries have already ceased the exchange model.
According to Mr. Lai, the decision to initiate a P2P platform was taken with the desire to serve clients internationally, without any unnecessary stoppages.
Okex’s statement is, “When the buyer or seller place an order, the market maker would step-in and become the counterparty of buyer or seller – with the consideration to their own net exposure, therefore the counterparty risk is diversified. All accredited market makers will go through a robust selection process by the Okex team.”
China’s Cryptocurrency Conundrum
Over the years, there have been a number of questions raised regarding the viability of a system such as cryptocurrency operating within China, a country that has such stringent laws against anything that is not strictly national. Experts had, in the past, raised the issue that if Bitcoin were to become operational in China, it would only be a matter of time before the regulatory authorities shut it down, in favour of new, state-backed systems and platforms.
To some extent, this claim has been proven, and will continue to be proven true, seeing as China is already well on its way towards becoming a major hub for nationalized cryptocurrency. There have been efforts by a number of Chinese companies to resolve the situation, by convincing and lobbying, however, so far, none of them have been successful at reintegrating international cryptocurrency into the Chinese market.
Moving operations abroad seems to be the only options for companies at this point, and unless some new measures are introduced; measures that dictate the fair usage of cryptocurrency and prevent any unnecessary involvement of regulation; the situation seems hopeless for currencies such as Bitcoin.
In the case of Okcoin and Huobi, the decision was obvious and instant. Several other companies are soon expected to follow in their wake, and launch their own P2P platforms.