Shanghai Man: Crypto recovers, disasters strike, and China’s crackdown moves to other sectors
This weekly roundup of news from Mainland China, Taiwan, and Hong Kong attempts to curate the industry’s most important news, including influential projects, changes in the regulatory landscape, and enterprise blockchain integrations.
It was a tumultuous week in China outside the financial world with severe flooding hitting Zhengzhou and typhoon In-Fa lashing into cities around Shanghai. Even worse, a COVID-19 Delta-variant outbreak in Nanjing is now threatening to disrupt the relatively open lifestyle that residents have enjoyed since strict anti-infection measures got the initial outbreak under control in early 2020.
Trouble in paradise?
Inside the Chinese financial world, government regulations on tech and education companies sent the local stock markets tumbling, which may have had an indirect role in the sharp rebound for cryptocurrency prices. The reminder that regulators can suddenly crush an industry might hurt the confidence of A-shares investors, driving more money back to alternative investments like Bitcoin. In any event, there is a lot on the government’s plate, so cryptocurrency shouldn’t be a huge focus these days.
Selling the rumors in advance
The volumes certainly supported this trend as Huobi and OKEx saw increases for the second week in a row. Despite rumors that more crackdowns might be on the way for exchanges, things have been quiet on the regulatory front. The platform tokens for both OKEx and Huobi recovered impressively. HT, which had dropped around 80% since mid-May, suddenly rebounded around 45%, making investors question whether the worst of the regulatory action was behind them. If nothing else, the rumors are becoming more and more priced in by this point, meaning there is less to fear from new announcements.
As one of the catalysts for the news, Huobi hinted at their upcoming PrimePool, which should allow users to mine the tokens of new projects using HT or other tokens. The Axie token AXS remained a popular asset to trade as it stayed in the top five on Huobi for most of the week. NFT gaming has yet to really take off in China, although projects like Polygon are still actively pushing the metaverse trend in the region.
Wiping the slate
On July 27, Huobi announced its China-based entity had been dissolved. As nearly all operations have gone overseas, this decision could be a step towards becoming disentangled with Chinese regulators. Huobi stated that it was the entity registered in Beijing all the way back in 2013 and that it was not the current operating entity of Huobi Global. According to the same article, OKEx is also in the process of dissolving a previously-used registered company.
With miners and exchanges now mostly abroad and out from under the control of Beijing, future policies can only really target the retail trading and usage of cryptocurrencies. Bobby Lee, who founded one of the earliest Bitcoin exchanges in China, discussed the possibility of an outright ban, saying it could happen in 4-5 years. Lee is now the CEO of wallet company Ballet and remains an active figure in the cryptocurrency space.
Looking for greener pastures
Binance’s CZ revealed in an interview with SCB 10X that he is looking for a new Binance CEO who he hopes will have a “very strong regulatory background.” CZ first disclosed his departure earlier this year when he said he hoped to step down as CEO in the next two to five years to fully focus on developing the BNB and Binance Smart Chain ecosystem and now his plans to “step down” seem even more accelerated.
Happening in Hangzhou
This developing tech region of Hangzhou was the stage as the World Blockchain Conference took place on July 24 and 25. This is one of the larger events on the blockchain calendar and with a focus on blockchain technology and technical development, received the support of local government organizations. The event had a lot of hype preceding it, due to digital keynotes from speakers like Vitalik Buterin and Sam Bankman-Fried. However, the close proximity of Typhoon In-Fa resulted in a lower turnout and more subdued activities. Buterin laid out his future vision for Ethereum, painting an ambitious picture of upcoming developments. A number of projects held side events in Hangzhou, including leading DeFi wallet ImToken and smart contract protocol Avalanche.
Top it up with CBDCs
Shenzhen residents can now use the e-CNY on buses and subways, according to a story on People.cn. Citizens are encouraged to actively use the central bank digital currency on public transportation for what is being called “green” travel. Citizens scan the code in the local transportation app and scan it when entering or exiting the vehicle or station. At the same time, citizens can use the e_CNY to top up their local travel cards.
This news will not be welcomed warmly by President of ASI Rich Checkan, who earlier this week suggested that CBDCs were “concocted in hell by Satan himself.” His strong words are likely aimed at countries like China, where government plays a strong role in both financial institutions and the tech sector.