Some cryptocurrency holders in China and Hong Kong are scrambling to find ways to protect their Bitcoin and other digital assets after the Chinese central bank released a new document on Friday outlining stricter measures in its broader cryptocurrency crackdown, including enhanced transaction monitoring systems. Toronto-based attorney David Lesperance, who specializes in moving wealthy individuals' assets to tax havens, stated, "Since the central bank's announcement, I’ve received more than a dozen messages—via email, phone, and encrypted app—from Chinese crypto asset holders seeking solutions on how to access their crypto holdings in foreign exchanges and cold wallets, and protect them."
Lesperance added that this move appears aimed at freezing the crypto assets owned by the wealthy, preventing regulators from taking legal action against them. He remarked, "I expected this for a while as part of the Chinese government's efforts to shut down any potential competition to the upcoming digital yuan." This development follows the People's Bank of China's announcement on its website on Friday that all cryptocurrency-related transactions in China are illegal, including services offered by foreign exchanges. It also completely banned services related to trading, clearing, issuing virtual asset derivatives.
Lesperance claims some of his clients also worry for their safety. The state ordered third-party payment providers to stop using Bitcoin in 2013. Chinese authorities halted token sales in 2017 and pledged to continue targeting cryptocurrency exchanges in 2019. Earlier this year, China's crackdown on the cryptocurrency mining industry extinguished half of the global Bitcoin network for several months.
In turn, London-based fintech data analyst Boaz Superado remarked, "The central bank's notice is not entirely new and doesn't signify a policy change.” However, this time, the cryptocurrency announcement involves ten agencies, including major departments such as the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security, indicating greater unity among top officials in the country. The State Administration of Foreign Exchange also participated, which may signal an increase in enforcement in this area.
Mark Bekin, CEO of Bespoke Growth Partners, noted, "So far, Chinese investors have largely avoided the ban by separating transactions—using local OTC platforms or increasingly now, foreign outlets—to agree on trade prices, then using banks or fintech platforms to convert yuan for settlement." However, with the People's Bank of China enhancing its cryptocurrency transaction monitoring capabilities, the alternative solution used by Chinese investors will gradually become a narrow tunnel.
Superado added, "The ongoing joke in cryptocurrency is that China has banned crypto hundreds of times. I would bet that people will still be trading Bitcoin in China a year from now."
