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Fallout of China's ban on all crypto transactions

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Yahoo Finance’s Jennifer Schonberger breaks down the latest in the crypto market amid China’s crackdown on cryptocurrency.

Video Transcript

[MUSIC PLAYING]

ALEXIS CHRISTOFOROUS: Welcome back. Beijing's new blanket ban on all cryptocurrency trading and mining has sent crypto exchanges and service providers scrambling to sever business ties with mainland Chinese clients. Yahoo Finance's Jennifer Schonberger here now with more on this. Jennifer?

JENNIFER SCHONBERGER: Good afternoon, Alexis. That's right. Global cryptocurrency exchanges that serve China are pulling out of the mainland in a hurry after authorities last Friday cracked down on crypto, saying that all crypto activities are illegal. Huobi Global and Binance, two of the largest global currency exchanges that are favored by Chinese users, have stopped allowing new customers to sign up for accounts. Now, Huobi is expected to also gradually phase out existing current customers' accounts by the end of this year.

Meanwhile, Token Pocket, which offers crypto wallets to users, has reportedly told current users that it will no longer offer service to those that operate in mainland China so as not to violate Chinese authorities' laws. Now, Perianne Boring, founder and president of the Digital Chamber of Commerce, tells me in a statement, the CCP is launching its own digital yuan.

And their strategy includes restricting access to open source cryptocurrencies. This is an opportunity for the US to lead in this technological frontier. We urge our policymakers to promote policies that encourage the further development of blockchain technology in the US.

And while this sounds like a scramble despite these moves, many companies and cryptocurrency exchanges have already shifted most of their business outside of mainland China. This because these actions that came on Friday were the latest in a long string of actions dating back to 2013. Just in 2017, cryptocurrency exchanges were banned within operating in China. And this summer, we saw crackdown on crypto mining.

Now I just want to emphasize to viewers that the actions that authorities took apply to overseas exchanges, global cryptocurrency exchanges that are serving users within China's mainland, hence why we're seeing the scramble today by these global exchanges to pull out and siphon ties. Alexis, back to you.

ALEXIS CHRISTOFOROUS: So Jennifer, will China's approach set a standard for how other countries approach regulating the crypto space?

JENNIFER SCHONBERGER: Yeah, the short answer is no. China's economy, the way that authorities regulate China's economy is far different than certainly the US economy and many other economies around the world. China wants control over their economy. They want to nationalize crypto. And to the extent that you've got these private currencies running around, creating potential speculation in their economy, they want to clamp down on that.

And so they are really looking to digitize the yuan. They are the first to have launched the central bank digital currency so that they can track Chinese citizens' transactions. So that is certainly not the case here in the US. Authorities here in the US, SEC Chair Gensler understands that there's validity here. There is innovation here. But regulators here also want to create rules for the road so that customers don't get scammed, and investors are protected from losses.

ALEXIS CHRISTOFOROUS: All right, Jennifer Schonberger, thanks so much for breaking down all that's happening in the crypto world regarding China at the moment.