Word on the Street: Waves from Chinese exchange crackdown yet to be felt

China cuts access to 120 overseas crypto exchanges (high impact)

After outlawing all the cryptocurrency-related companies in the country, the Chinese government is closing the last avenue citizens had to getting their hands on digital assets, blocking overseas exchanges. According to the South China Morning Post, access to 120 exchanges, including many expatriated major Chinese exchanges Binance and OKEx is no longer possible from within China.

As BNC has touched on in previous research, Chinese originating exchanges are the most numerous of any country and have been popping up in jurisdictions all over the world, particularly in Hong Kong. Chinese exchanges are among the top in the world in terms of trading volume and no doubt a lot of their business comes from mainland China.

The message displayed to a user in China trying to browse the Binance website.

The Chinese government has also closed down crypto-related websites, advertisements and any related sites on WeChat. Compounding that, the government has demanded that all hotels and conference venues cancel any cryptocurrency event bookings.

China and India, two of the world’s largest markets, have been moving towards zero-tolerance of crypto and towards a more centralized financial system of their own. China is working on a digital RMB and India has already siphoned all cash out of its economy and rolled out the Aadhaar card, a digital payment and identity government-kept database.

Both countries are getting closer to total surveillance of their citizens, tracking huge amounts of personal data and China has employed US company Idemia to build out the biometric and facial recognition technology to do so.

The company website says: Morpho has been building and managing databases of entire populations for governments, law enforcement agencies and other government bodies around the world, whether for national ID, health cards, bank cards or even driver license programs.

Through access to customer data generated by private companies, especially online payments and social media companies, it has been summated that the Chinese government has built a social credit rating system and there is an ongoing lawsuit in India that accuses the government of doing the same with the Aadhaar card system.

SEC announces review of rejected ETFs (medium impact)

Although it may not have been so reflected in the impact on price, the news buoyed sentiment of all cryptos across the markets with the price of bitcoin getting over the $6,500 handle and the rest of the altcoins also showing positive returns over 24hrs.

SEC Commissioner Hester Peirce who has been the most apologetic of commissioners on the the board assessing the future of cryptocurrencies in the US announced the news in a Tweet sharing a letter sent by SEC Secretary Brent Fields to Eugene Schlanger, legal counsel for the NYSE group, whose ARCA exchange is the proposed venue for a bitcoin ETF.

The letter reveals the SEC is going to review the five rejected ETF proposals submitted by Direxion. Apparently, another two letters have been sent out to a similar effect in regards to the ProShares and GraniteShares ETFs.

According to Commission rules, a review can be triggered by a single commissioner but requires the majority of the members to reverse a decision. Although not explicitly said, Hester Peirce is putting up the fight but the likelihood of a change in the ruling is very slim.

US Congresswoman declares crypto holdings (low impact)

By a House of Congress decree, congressmen and women must now disclose all their crypto holdings over $1,000 within a 45-day window. A couple of weeks ago, Congressman Rep. Bob Goodlatte (R-VA) disclosed his crypto holdings of between $17,000 – $80,000.

This week, Tulsi Gabbard, the US congresswoman representing Hawaii declared that she also bought into the crypto market back in December 2017 and owns between $1,001 – $15,000 in Ethereum and Litecoin.

Plaintiff drops Ripple lawsuit (low impact)

The District Court of California announced one of the lawsuits filed against Ripple Labs has been dropped by the plaintiff Ryan Coffey who was claiming for losses he suffered on his investment worth just over $1,000 at the time.

He brought the accusations that Ripple misled investors in the marketing of XRP in a “never-ending ICO” and at the start of August even filed a motion to remand individuals at the company in custody; this was turned down by the court. The court announced that the plaintiff retracted the lawsuit and the case has concluded with Ripple Labs absolved.

Separately, Ripple’s CTO Stefan Thomas expressed in a podcast that he believes American Express may be using Ripple’s X-Rapid product.

Crypto coming to 1,000 Colombian stores *(*low impact)

The developing country will see crypto point-of-sale services in 1,000 cafes and small businesses thanks to a partnership between Pundi X and Colombian investment firm Manticora Capital.

The Pundi X point-of-sale software will allow for BTC, ETH, LTC, XLM, XEM, XVG, QTUM and ACT payments.

CME Bitcoin futures volume pulls way ahead of CBOE (low impact)

Trading in the CME bitcoin futures contract (BTC) is now about 5-times that of its rival Cboe, despite it being the first to issue futures with its XBT contract. In July, trading volume in BTC was 30,000, whereas in XBT it was a mere 6,000. CME futures trading is also far above bitcoin spot trading on Coinbase.

Tencent distances itself from Bitmain IPO (low impact)

Chinese tech conglomerate Tencent, owner of the ubiquitous social media app WeChat, has denied any involvement with pre-IPO fundraising that it was rumoured to be involved with.

Bitmain has been scrutinized for not publishing its most recent quarterly earnings which are believed to have been in the red to the tune of $500-$700m. Japanese tech giant Softbank also denied rumours that it was involved in the fundraising round.

Bitmex reported moving HQ to world’s most expensive office (low impact)

According to a report in the Hong Kong Economic Times, crypto exchange Bitmex has relocated its Hong Kong office to the 45th floor of the Cheung Kong Center, though it didn’t identify its source. The skyscraper is home to Goldman Sachs Group Inc., Barclays Plc, Bank of America Corp., the securities regulator, Bloomberg LP and billionaire Li Ka-shing’s empire.

Bitmex has apparently rented an entire 20,000 square feet floor at HK$225 per square foot.

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The price of bitcoin and the rest of the crypto market was up on Friday and largely unaffected by the rejection of the Direxion and ProShares bitcoin ETFs. However, quakes on the other side of the world in China may yet hit US shores.