China's Oldest Exchange Exits Bitcoin Business Amidst Regulatory Pressures

BTCC, ostensibly the first cryptocurrency exchange established in China, exited the bitcoin trading business last week. According to statements, this was the result of the continued regulatory pressure Beijing is exerting on cryptocurrency businesses. The company will now transition to blockchain-related endeavors.

BTCC Closes Its Exchange Business

BTCC, the company that once ran the most prolific exchange in Asia, announced it has exited the cryptocurrency business. The company said it had sold its shares in the Singapore exchange ZG.com in May 2020. Most of the cryptocurrency exchanges based in China ran overseas years ago, during the first cryptocurrency crackdown back in 2017.

But now, the government is tightening its grip on crypto to avoid capital losses. The People’s Bank of China is now targeting OTC businesses and cryptocurrency-related accounts. These P2P and OTC businesses targeted will have their accounts frozen, according to local reports. This will affect cryptocurrency brokers in the country, which now largely run the whole market due to restrictions.

An offshoot of the company now operating in Hong Kong, however, issued a statement explaining the crackdown would not affect them. The company stressed that Mainland China’s restrictions would not affect its cash flow. It declared:

BTCC [Hong Kong] is not impacted for now because BTCC doesn’t provide trading of cryptocurrencies, but derivatives of cryptocurrencies.

The company will now shift to building blockchain-based applications. The government of China supports the use of blockchain and made it one of its focuses in its fourth industrial revolution program.

Mining Crackdown in Full Effect

While cryptocurrency exchanges are also feeling the heat from the government, miners are taking the worst hit. The government has closed several mining facilities and issued mining bans in major provinces. This has affected the operation of the ousted miners, who are now seeking shelter in other regions and countries.

Inner Mongolia, Sichuan, and Yunan, all provinces where cryptocurrency mining is popular, have issued warnings and ousted miners from their territories. Mike Huang, operator of a cryptocurrency farm in Sichuan, told Reuters the situation is dramatic. He stated:

Mining machines are selling like scrap metal.

This exodus has further affected the Bitcoin network. The hashrate (the amount of work securing the network) has been inconsistent for two weeks now, and is at 67.9 EH/s at time of writing, with a decline of over 28% since yesterday. The Bitcoin hashrate is now down almost 65% compared to its all-time high of 191 EH/s in May.