Leonhard Weese, the founder of the Bitcoin Association of Hong Kong, revealed in a November 29 Forbes article that OKCoin, Huobi, and BTCC, which were once the three largest cryptocurrency exchanges in China, are prospering in overseas markets such as Hong Kong.
In September, the Chinese central bank People’s Bank of China (PBoC) and local financial authorities cracked down on cryptocurrency exchanges, imposing an indefinite ban on trading bitcoin and other cryptoassets. BTCC and other exchanges were requested to halt their services by the end of September, while OKCoin and Huobi were allowed to operate until the end of October, due to their large consumer base.
By the first week of November, all of the exchanges in the Chinese bitcoin market had shut down and relocated to neighboring countries. BTCC, OKCoin, and Huobi settled in Hong Kong and began to provide over-the-counter (OTC) trading services to international users. OKCoin and Huobi rebranded to OKEx and Huobi Pro respectively and started serving traders in Hong Kong and other markets within Asia.
CnLedger, a trusted cryptocurrency news source within the Chinese market, further revealed that OKEx and Huobi Pro plan to launch new trading platforms that enable fiat-to-bitcoin trading, allowing investors to trade bitcoin with the Chinese yuan and many other fiat currencies.
“OkEx (and likely, Huobi-Pro) will soon launch P2P bitcoin tradings with various fiat currency support,” said CnLedger.
The relocation of OKCoin, BTCC, and Huobi to Hong Kong have provided an alternative ecosystem in which traders can still invest in bitcoin and other cryptocurrencies, given that they can circumvent strict capital controls and monetary policies imposed by the Chinese government.
Existing over-the-counter (OTC) markets in Hong Kong have started to experience a rise in their trading volumes, as Chinese investors migrated to the Hong Kong market to trade cryptocurrencies.
In late September, Zeng Danhua, the co-author of a bitcoin investment guide, stated that the movement of capital and funds from the Chinese market to other regions like Hong Kong is inevitable if the Chinese government maintains its stance on the trading ban.
“The trend of digital currency transactions moving offshore is inevitable. The regulators may have needed to shut the platforms to guard against financial risks, and there may be a bitcoin bubble, but its investment value persists,” said Danhua.
Former Chinese cryptocurrency exchanges have already begun to experience an increase in demand for their services in the Hong Kong market, and as such, platforms like BTCC, Huobi Pro, and OKEx have continued to prosper outside of China.
Still, the legality of bitcoin and the government’s short-term plan with its cryptocurrency trading ban remain unclear. But, CnLedger revealed that the Chinese government had expressed interest in enforcing Know Your Customer (KYC) and Anti-Money Laundering (AML) policies on bitcoin trading, which may lead to further regulation in the future.
“Xinhua News, official press agency of the Chinese government: virtual currencies have become the top choices of underground economies. We shall adopt ‘zero-tolerance policies’ towards crimes hidden underneath, and take measures such as record-keeping, licensing, AML processes, real-name, limiting large transactions,” wrote CnLedger.