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China’s efforts to ban cryptocurrency use in the country have recently received a new twist when a few weeks back the country proclaimed crypto transactions illegal. At this point, users can only legally hold cryptocurrencies, and not do anything else with them.
However, the ban has had other far-reaching consequences that are more indirect. One example is the fact that Mainland Chinese users will soon no longer be allowed to use or even own accounts on foreign crypto exchanges.
Crypto exchanges are leaving China
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Popular crypto exchange KuCoin seems to be among the first ones to request that all Chinese users from Mainland China will have to withdraw their funds from their KuCoin accounts. Following the withdrawals, users will have until the end of the year to close their accounts.
KuCoin explained this in its announcement, stressing that this is a consequence of the People’s Bank of China’s decision to ban cryptocurrencies. Allowing users to remain would lead to the regulatory pressure that the exchange is not equipped to deal with, and so the only remaining course of action would be to ban users from using its platform.
The best that the exchange can do is to allow users this three-month period to get their affairs in order and shut down their accounts before they get permanently cut off.
KuCoin added that it started an internal review to determine all possible courses of action, and in the end, only one remained — cutting its losses and leaving China for good. Or, at the very least, until the regulatory situation changes, which is unlikely to happen anytime soon.
As mentioned, KuCoin is the second large exchange to do this, following Huobi which announced recently that it will stop accepting new users from China. The company also had to move $4 million in BTC from its mining pool, which was also a consequence of China’s ban. For the moment, only DEXes seem to be able to operate in the country, which has led a few of them to thrive, specifically dYdX, which has become a go-to exchange in the country.