China speculation runs wild as Binance plans Beijing office

This follows a speech by President Xi that sparked a frenzy of blockchain development across China, and led some to suspect that cryptocurrency trading platforms would once again be legalized in the country.

But while bullish traders jump on the rumours, others are more skeptical, suggesting the legalization of cryptocurrency trading would be unlikely for a country that likes to keep a tight rein on its money supply.

Binance in Beijing

Formed in Shanghai, Binance stopped servicing Chinese users in late 2017 when the countrywide trading ban was put in place. The exchange then migrated to Hong Kong and Japan before finding a home for its headquarters in Malta. The first office in Shanghai, however, is still thought to be operational, and according to sources speaking to CoinDesk will soon be accompanied by a new office in Beijing.

A spokesperson from Binance neither confirmed nor denied the plans, providing no insight on what kind of operations the new office might be intended for. But, recent political developments in China suggest it could play a part in helping the exchange to work more closely with Chinese regulators.

When Binance announced its Venus stablecoin project in August, co-founder Yi He referred to the project as a cryptocurrency version of the Chinese Belt and Road Initiative, which aims to connect China with underdeveloped areas across Asia, Africa, and Europe.

Speaking to Bloomberg after the announcement, Yi He said that Binance would play a supporting role to the Chinese government by providing cryptocurrency advice that would help them keep up with other countries around the world adopting digital currencies and rolling out strict measures to supervise the industry:

"Thats where Binance’s value lies, to help them clearly supervise the crypto industry and ensure stable sustainable development," said Yi He.

Some of the recommendations Binance made to the Chinese government at the Venus announcement have already been put into action.

Xi’s call to make blockchain a "strategic pillar" of China’s development is one example. Binance originally advised that China should "establish the core strategic position of the blockchain industry and digital stable currency in the future financial system."

Lifting the ban?

In October, Binance launched a peer-to-peer trading service in China that allows traders to transact BTC, ETH and USDT between themselves using the payment apps Alipay and WeChat Pay. This led to a public Twitter showdown with Alipay, which tweeted: "If any transactions are identified as being related to bitcoin or other virtual currencies, @Alipay immediately stops the relevant payment services."

Since then, Binance CEO Changpeng Zhao has continued to show interest in bringing bitcoin trading back to China.

"Price predictions are easy. It’s just hard to be right about the timing. We will see $16k soon-ish. 4 billion people working on it as we speak" tweeted Changpeng Zhao on November 1st, a reference to the population of mainland China.

When a screenshot surfaced on October 30th that appeared to show a cryptocurrency exchange license issued by the Chinese government, rumours of a potential overturning of the crypto trading ban swept though Crypto Twitter.

But it wasn’t long before Zhao stepped in again to shed some light on the situation. He said the supposed licence is just is a generic business license containing the phrase “trading services,” and doesn’t represent a crypto trading license for local companies, nor does it suggest that legalising crypto trading is on the agenda.

And, as China-based blockchain consultant Robert Van Aert suggests, China has few reasons to open up to cryptocurrency exchanges.

Though blockchain technology is being welcomed to help spur innovation and upgrade the government’s surveillance, cryptocurrency represents a threat to the government’s grip on the yuan, and could help citizens to evade strict capital controls.

"The danger in this immature industry is people hyping up news and creating ungrounded hope among investors," said van Aert to Brave New Coin. "We have seen the RMB depreciating over the last few months, as initiated by the Chinese government to counter the US tariffs, and allowing Chinese citizens to buy bitcoin would put further pressure on its value."