China and Hong Kong Cracks Down on Crypto as Markets See Red

Regulators in Hong Kong have stated that all crypto trading exchanges and companies need to be regulated regardless of whether they’re selling securities or not. China is also being heavy handed with crypto as its CBDC testing continues. 

According to Reuters, the Securities and Futures Commission (SFC) had previously placed an ‘opt in’ regulatory framework for cryptocurrency trading platforms. This made the region an attractive option for companies wanting to move from restrictive shores in China.

SFC CEO Ashley Alder stated that the previous framework made it possible for some trading platforms to operate away from the regulatory radar, according to the report. Under the proposed regulations in Hong Kong, Bitcoin and crypto exchanges will have to get licensed, and will no longer be allowed to sell digital assets to customers.

China Tightening the Screw Again?

China has an ever-expanding reach over Hong Kong, much to the chagrin of most of the city’s residents, and that appears to be seeping into crypto regulations there and on the mainland.

According to LongHash, state media in China has reported that selling crypto assets that have been purchased with local currency to withdraw foreign currency could be considered money laundering.

NEW: Chinese state media suggests that selling crypto purchased with RMB to withdraw foreign currency could be considered money laundering, as would selling crypto purchased with foreign currency to withdraw RMB. https://t.co/UYR1nJlidx… pic.twitter.com/0Tm9k73lmP

— LongHash (@longhashdata) November 3, 2020

Spartan Black Group partner Kelvin Koh suggested that the regime wants to clear the path for its own central bank digital currency and will not tolerate any others;

“The timing of the Chinese OTC and exchange crackdowns is no coincidence. The PRC government is sending a strong message about its stance on cryptocurrencies other than the DCEP.”

Speaking at the Hong Kong Fintech Week event on Monday,  governor of the People’s Bank of China, Yi Gang, said the testing of the DCEP has been running smoothly across four cities in China, with 4 million transactions conducted involving over 2 billion Yuan (around $US300 million).

The FUD emanating from the Far East is nothing new and usually coincides with crypto bull markets. Ethhub founder Anthony Sassano saw the irony in the situation;

Knew it https://t.co/BX8EQZURFk

— Anthony Sassano | sassal.eth ⛽ 🏴 (@sassal0x) November 3, 2020

Crypto Market Correction Deepens

Over the past 24 hours, around $15 billion has been dumped from digital asset markets as the selloff accelerates. Total market capitalization has dropped back below $400 billion and is currently at $394 billion according to Coingecko.

Bitcoin is beating a retreat back from $14k and the altcoins are bleeding out as usual with many of them, especially those related to DeFi, shedding double-digits over the past day or so. China FUD usually has this effect, but in all fairness, a market correction has been overdue, especially for BTC.