Chinese regulators this month stepped up their efforts to halt illegal online digital currency trading, resulting in the closure or the ceasing of operations of a number of local exchanges. At least five local exchanges trading cryptocurrencies have reportedly ceased operations, while some have announced that they will no longer be serving Chinese customers moving forward.
The campaign to regulate the country's massive cryptocurrency industry included a series of official warnings and notices sent to digital exchanges over the past few weeks. Regulators were forced to step-up their clean-up efforts following a flurry of digital currency trading activity after Chinese President Xi Jinping announced that the the county was supportive of blockchain technology.
According to cryptocurrency data, 20 out of the top 50 digital currency exchanges are based in the Asia-Pacific region. Around 40 percent of all Bitcoin transactions for the first half of the year are in Asia, with the exchanges mostly happening in China.
Xi's announcement resulted in massive speculative buying and selling of different digital coins, both on domestic platforms and international exchanges. China's central bank even issued a warning to investors to be very careful when investing in digital currencies. China's Weibo also took action and suspended several accounts operated by digital exchanges such as Binance Holdings and Tron.
The latest wave of exchange shutdowns is China's biggest clean-up drive after its major regulatory campaign back in September 2017. In its last major crackdown, regulators went after the more well-known platforms, but trading still remains rampant in the country as people simply shifted to lesser-known over-the-counter platforms that deal directly with digital currency assets. In its latest clean-up efforts, regulators are now going after the smaller exchanges.
Chinese exchanges such as Bitsoda, Biss, and Akdex announced that they will be halting all activities. Biss recently announced that its executives are in contact with government regulators involving an investigation into its activities. On Monday, Btuex announced that it will be suspending all Chinese accounts and will only be serving overseas users.
The increased regulatory actions have significantly reduced investor confidence in the digital currency market, causing cryptocurrency prices to drop. Bitcoin, the top cryptocurrency traded on digital exchanges, dropped to its lowest level in six months. Bitcoin slightly recovered on Wednesday, but it is still on track to have its worse month since November 2018.
The increased regulatory actions have also forced some traders to pull out their assets from exchanges, transferring them to safer locations such as their personal digital wallets on their smartphones or computers. According to ImToken, one of the sector's largest mobile wallet apps, it has recorded nearly 10 million users since November of last year.
