Yesterday, China officially announced that local cryptocurrency exchanges will be shut down by the end of September.
However, markets didn't take that news particularly hard as Bitcoin and the entire altcoin space rallied hard. With some coins showing gains of roughly 20-30%.
Behind that strength was probably the fact that OKCoin and Huobi were granted an extension to close down their exchanges until the end of October.
Those two are some of the largest exchanges in China and the fact that they won't be forced to sell everything all at once, like many were fearing, was seen as good news by market participants.
Also, the fact that the exchange shut downs don't appear to affect the OTC Bitcoin markets in China as well as the peer-to-peer exchanges likely tended to soften the initial blow of the China exchange crackdown news.
Furthermore, China's Bitcoin trading volume "only" accounted for roughly 15% of all cryptocurrency trading over the last 6 months, which means the worst case scenario didn't mean the end of the line for Bitcoin and the rest of the crypto space and as cooler heads prevailed, that was likely realized.
*Something to take note of is the fact that the mining of Bitcoin seems to be continuing in full force out in China which leads some to believe that this "ban" is only temporary.
It's not all bad news!
One person's trash is another person's treasure!
As we know, the current Bitcoin industry that exists in China is mostly going to be shut down, but it likely isn't just going to die.
It's going to branch out and seek a new home.
One likely landing spot is Hong Kong, according to Leonhard Weese of the Bitcoin Association of Hong Kong.
https://www.bitcoinhk.org/
Specifically, Weese noted that China's restrictions on bitcoin trading and usage will drive businesses to Hong Kong and also to nearby countries like Japan and South Korea.
Both of which have welcomed Bitcoin and cryptocurrency with open arms.
"People in China will be more careful about marketing these events, and a lot of that marketing activity will come to Hong Kong in the form of conferences and communities."
Which will also likely be a boon to their overall economy.
Why Hong Kong?
Well, proximity is a big one, probably the main one actually. However, the next most important factor is Hong Kong's regulatory friendly environment for Bitcoin and blockchain startups.
So far, even with their friendly stance towards Bitcoin and cryptocurrency, they have only managed to create one major cryptocurrency exchange in the last 3 years, Bitfinex.
That is somewhat surprising since they have been praised for being a regulatory friendly region since early 2015.
However, Weese (among others), think that with the Chinese crackdown we could see explosive growth with Hong Kong exchanges as well as other cryptocurrency related businesses.
Conclusions:
It's impossible to know how long this Chinese crackdown on cryptocurrency will last, or even if it will be permanent.
However, we do know that if it gets squashed in one place it will seek out a new home.
Especially since may of the neighboring countries have taken such a friendly stance regarding Bitcoin and cryptocurrency.
Hopefully the faster it gets adopted in these other places it forces China to reverse course and reconsider their current decisions.
Only time will tell I guess.
Stay informed my friends.
Sources:
https://www.bitcoinhk.org/
https://cointelegraph.com/news/chinas-stricter-bitcoin-regulations-will-strengthen-hong-kong-market
Image Sources:
https://twitter.com/drivinsouth65/status/519414867984646144
http://www.startupshk.com/hong-kong-bitcoin-startup-alitobit-will-launch-3-atm-locations-april-2014/
https://www.quora.com/How-is-Hydra-still-present-in-Ant-Man-when-the-last-of-them-were-eliminated-in-the-Avengers-Age-of-Ultron
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