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The Future of the Crypto Industry in China is under Threat

Crypto exchanges and miners in China are struggling to deal with risk factors created by the State Council. The chief administrative authority of the People’s Republic of China called for a crackdown on crypto trading and mining in the country. The State Council’s warning represents a serious issue. It has the potential to discourage people from operating crypto trading or mining business.

Chinese miners started to look for overseas sites to host their mining machines following the State Council’s warning. While the authorities have yet to release any concrete plans to enforce the crackdown, some major mining companies are already taking steps in response to the warning. Huobi closed its miner hosting services in mainland China. Crypto mining pool BTC.TOP suspended its operations in the country and HashCow will no longer buy new rigs.

In the long run, crypto mining will continue to exist in the country. The mining will shift from industrial-size data centers to home miners or small or medium-sized miners.

 

Crypto industry and risk factors

Crypto exchange Huobi scaled back its offerings following the State Council’s notice. Its spot trading remained largely unaffected. But Huobi suspended futures contracts and certain other leveraged investment products.

OKEx is another main exchange for Chinese investors. It was ready to suspend transactions between its platform token OKB and China’s local fiat currency renminbi. OKEx later canceled the plan due to customer concerns.

Some exchanges would require the customers to hold their platform tokens in exchange for discounted transaction fees and other premium services.

The Economic Information Daily, which is a state newspaper, gave more details regarding the government’s position. It mentioned crypto’s biggest risks, such as more interest from average Chinese investors and financial risks associated with high leverage. As for the crackdown on crypto mining, the media outlet said it is mainly due to environmental concerns.

 

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