China’s first cryptocurrency exchange, BTCChina, has now exited the bitcoin business to protect itself from the country’s ongoing crackdown on crypto mining. The company is now exploring other blockchain applications and ultimately moving its focus away from cryptocurrency.
Company Departs From Bitcoin Business, Sells Crypto Stake
Earlier today, BTCChina announced that it had sold its stake in a Singaporean crypto exchange to an unidentified foundation in Dubai, as its departing from a bitcoin-based business model. The company further elaborated that with the shift in focus of its core business, it will now focus more on other applications of the blockchain, which is the underlying principle governing cryptocurrency. Founded in 2011 in Shanghai, BTCChina is one of the leading digital asset trading platforms that once claimed it held roughly 80percent of the world’s cryptocurrency trading.
BTCC Faced Previous Crypto Crackdown, Changes Gear Now
Being the first crypto exchange in China, the company had previously experienced waves of a crypto crackdown. When Chinese regulatory authorities had banned initial coin offerings (ICO), a cryptocurrency-based fundraising process in September 2017, the company said it would stop trading cryptocurrencies.
During an interview in January 2018, Bobby Lee, CEO, and co-founder of BTCC, said that the resilient nature of cryptocurrencies will enable them to spring back following more regulations:
“It's only a matter of time before China lifts the crypto exchange ban.”
Sichuan Crackdown Deals Heavy Blow To Crypto Operations
The crackdown in Sichuan happened last Friday when both the Sichuan Provincial Development and Reform Commission and the Sichuan Energy Bureau ordered local electricity companies to shut down mining operations in the region by Sunday. Since then, the BTC hash rate has continued to plummet.
BTCChina’s decision to abandon its Bitcoin-based business structure does not stand alone. China’s previous crackdown on cryptocurrency had forced many exchanges to move abroad, including some major industry players like Huobi, Binance, and Okex. The latest crackdown is forcing many crypto mining operations to shift their bases abroad to the US, Canada, Kazakhstan.
Chinese Government Concerned About Fraud
The measures taken by the PBOC are tightening regulations on domestic dealers engaged in foreign cryptocurrency transactions and ICOs. The bank authorities have also forbidden China-based financial institutions from dealing with and funding cryptocurrency-linked activities, like digital asset trading. For companies like BTCC, this would have been a death blow as their primary business model was a cryptocurrency exchange.
Because of the regulations, both mining and transacting in crypto, especially Bitcoin, have been deemed illegal. The PBOC is backing up its decision to curb the increasing overseas transactions leading to regulatory compliance evasion.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.