Protocol | China

China’s great crypto shutdown has arrived

Beijing's strictest-yet crypto ban is the real thing, and 30 companies are quitting the country.

A crypto coin covered in black crystals

The most common response from crypto platforms has been to announce a permanent suspension of new registrations from China.

Photo: Executium/Unsplash

Two weeks after China outlawed virtually all crypto-related activity, the industry is springing into action, announcing varying levels of restrictions for Chinese users. Some have even shut down completely.

From crypto exchanges to crypto wallet apps to crypto market data publications to decentralized mining services, at least 30 Chinese companies have released statements or changed their policies in the last two weeks. The flurry has come after Beijing released two pieces of major regulation, one focused on crypto-related finance activities, the other on mining.

Even though users in China can theoretically still use VPNs and fake identities to get around these restrictions, the latest moves from crypto companies will make their investment experience even more difficult and likely deter some from keeping at the crypto game.

Among all of the affected companies, crypto exchanges are likely the most affected, but also the most prepared. They were the target of one of the most important crypto crackdowns before this year: China's 2017 ban on Initial Coin Offerings, commonly referred to as the "Sept. 4 Incident" in the industry. At the time, crypto exchanges were singled out from other players in the industry and specifically told to shut down. It prompted most domestic exchanges to either register as overseas entities or shift their business operations abroad. Binance, currently the world's largest crypto exchange, is the best example of the latter. By doing so, it has avoided most of the heat this year.

Since the 2017 rule didn't specify that overseas exchanges were included, some of Binance's peers continued to operate from within China. Huobi, which is also among the top exchanges worldwide, registered a Seychelles-based entity and continued to allow Chinese users to open accounts there, who reportedly still contributed about 30% of the company's revenue. It also retained a significant physical presence in China, including offices and employees, until this year.

The latest policy shift has closed the Huobi loophole. Not only does the rule make it clear that overseas exchanges are violating the law if they serve Chinese users, it also says domestic employees of "overseas virtual currency exchanges" or anyone providing services to them can be punished. For Huobi and other effectively China-based crypto exchanges, it means their China-based employees are in danger if the companies don't execute a clean separation with Chinese users and their money.

The most common response from crypto platforms has been to announce a permanent suspension of new registrations from China. Huobi did so Sept. 24, Binance did so on Sept. 26, and several smaller exchanges like AEX and Gate.io have done the same.

A bigger step, which not every exchange is willing to take, is to clear out all existing users based in China. Two days after that initial announcement, Huobi said it would take this step, and would need until the end of the year to complete it. BitMart, CoinEx and KuCoin — three crypto exchanges that were also started by Chinese founders — announced similar mandates.

Another major change in how Beijing regulates crypto: criminalizing hosting, brokering or even just providing information on crypto transactions. It means a much larger group of companies and individuals now face regulatory risk.

At least three crypto wallet companies, TokenPocket, imToken and OneKey have terminated some or all services for China-based users. Market data portals, be they overseas ones like the Singapore-based CoinGecko or domestic ones like the Zhejiang-based QKL123, will no longer serve China-based IPs. Bitmain, the Beijing-based, Hong Kong-listed manufacturer of bitcoin mining machines, will no longer sell to miners in mainland China, according to CoinDesk.

For some smaller companies who may have been struggling for a while, the latest regulations are the last straw, prompting them to dissolve. At least three mining-related companies, SparkPool, BeePool and QSKG, have decided to terminate their operations globally. Four crypto exchanges announced their complete closedown date between September and November and warned users to cash out their assets before that.

Several non-crypto companies have reacted too. Alibaba posted a statement on its global sourcing website Alibaba.com, saying it is suspending the sales of any crypto mining equipment in accordance with the new regulation. Whether the ban's effect extends to Alibaba's other platforms are unclear, as currently crypto mining equipment can also be found on Alibaba's ecommerce platform AliExpress. The company didn't respond to Protocol's request for comment.

And two Chinese brokerage companies, Tiger Brokers and Futu, are taking measures to ban Chinese users from making investments in crypto-related financial products, like the Grayscale Bitcoin Trust (GBTC).

The latest regulations underscore Beijing's resolve to eliminate crypto within its borders. Many Chinese crypto companies had held out hope of walking the regulation's fine lines to continue operating within the country. Now they're waking up to a harsh new reality. Time will tell who can still pivot to survive, and who will have to give up their crypto dreams.

Theranos trial reveals DeVos family invested $100 million

The family committed "on the spot" to double its investment, an investment adviser said. Meanwhile, the jury lost another two members, with two alternates left.

Betsy DeVos' family invested $100 million in Theranos, an investment adviser said.

Photo: Alex Wong/Getty Images

Lisa Peterson, a wealth manager for the DeVos family, testified in Elizabeth Holmes's criminal fraud trial Tuesday, as prosecutors continued to highlight allegations about how the Theranos CEO courted investors in the once-high-flying blood-testing startup.

An email presented by the defense revealed that the family committed to doubling their investment in Theranos to $100 million "on the spot" during a 2014 visit to company headquarters.

Keep Reading Show less
Michelle Ma
Michelle Ma (@himichellema) is a reporter at Protocol, where she writes about management, leadership and workplace issues in tech. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.

If you've ever tried to pick up a new fitness routine like running, chances are you may have fallen into the "motivation vs. habit" trap once or twice. You go for a run when the sun is shining, only to quickly fall off the wagon when the weather turns sour.

Similarly, for many businesses, 2020 acted as the storm cloud that disrupted their plans for innovation. With leaders busy grappling with the pandemic, innovation frequently got pushed to the backburner. In fact, according to McKinsey, the majority of organizations shifted their focus mainly to maintaining business continuity throughout the pandemic.

Keep Reading Show less
Gaurav Kataria
Group Product Manager, Trello at Atlassian
Protocol | Enterprise

Google Cloud helped design Intel’s newest data center chip

Mount Evans is Intel's first IPU data center chip, and Google Cloud, which played a role in its development, will be the first customer.

Intel CEO Pat Gelsinger has a new data center chip.

Photo: Pau Barrena/Bloomberg

When Intel announced that it had turned to technology developed by longtime rival Arm for a new infrastructure processing unit called Mount Evans, it said the technology was co-developed by a cloud-service provider that it wouldn't name: until now.

Google Cloud is that design partner, and it has committed to deploying the technology inside its cloud data centers, Intel plans to announce Wednesday at its Innovation event.

Keep Reading Show less
Max A. Cherney

Max A. Cherney is a Technology Reporter at Protocol covering the semiconductor industry. He has worked for Barron's magazine as a Technology Reporter, and its sister site MarketWatch. He is based in San Francisco.

Protocol | Workplace

Lessons from Facebook’s civil rights audit, a year later

Before the Facebook Papers, Facebook's audit made the case for transparency.

A new report released Wednesday lays out how companies can successfully conduct their own civil rights audit.

Photo: Kirill Kudryavtsev/AFP via Getty Images

Before Frances Haugen, before the Facebook Papers, before The Wall Street Journal's Facebook Files, Facebook had a chance to correct some of its algorithmic bias issues through an internal "civil rights audit" that concluded last year. According to people who contributed to the audit at the time, the company's response fell short.

That audit was conducted by Laura W. Murphy, a former director at the ACLU who has experience running similar audits for companies like Airbnb and Starbucks.

Keep Reading Show less
Michelle Ma
Michelle Ma (@himichellema) is a reporter at Protocol, where she writes about management, leadership and workplace issues in tech. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.

The case for flying cars — and why they’re coming sooner than you think

Kitty Hawk's Sebastian Thrun on why he believes in the avian future of transportation. And why he'd prefer you not call them "flying cars."

Kitty Hawk's Heaviside might be flying over your house sometime in the next few years.

Photo: Kitty Hawk

Sebastian Thrun was one of the early pioneers of the self-driving car, and spent years working at Google and elsewhere to make autonomous vehicles a reality. Then he ditched the industry entirely and went for something even bigger: flying cars.

Except, wait, don't call them flying cars. Thrun, now the CEO of Kitty Hawk, calls them "electric vertical take-off and landing aircrafts," or eVTOLs for short. (It's not quite as catchy.) But whatever the name, Thrun is betting that they'll be transformative. No more dealing with existing infrastructure and outdated systems, no more worrying about the human driver next to you. He imagines a fully autonomous, fully safe, much more environmentally-friendly skyway system that doesn't have to worry about terrestrial matters at all. And he's convinced that's all coming much faster than you might think.

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Latest Stories