China lost its dominant position in the cryptocurrency markets quite some time ago. That is the direct result of the People’s Bank of China preventing users from trading cryptocurrencies with the Chinese yuan. According to experts, it seems a lot of the smaller crypto exchanges in the country will soon be forced to shut down.
A Worrisome Situation for Crypto Exchanges in China
It is evident very few cryptocurrency exchanges in China still play any real role of importance. Ever since the PBoC decided to ban CNY-based trading, there has been far less interest in dealing with centralized exchanges across China. For a lot of the smaller companies, this may prove to be the beginning of the end, according to local experts.
Indeed, it is expected that the smaller trading platforms will shut down due to their failure to attract new users. These are the findings of 8BTC, a Chinese news portal. According to their research, there are 14 top cryptocurrency exchanges in China which combine for over 70% of the total daily transactions. Considering that there are nearly 200 crypto trading platforms in China, there is quite a steep discrepancy in this regard. It is not an issue that is unique to China by any means, but it seems to be growing worse as time progresses.
It has always been extremely difficult for cryptocurrency exchanges to gain traction. Companies that launched in the past year or two are especially struggling, mainly because they are well behind the curve. Additionally, there is a growing set of regulatory guidelines to keep in mind, and they are easier to comply with for larger cryptocurrency firms which made a lot of money by virtue of entering this market years prior.
However, there are plenty of other concerns to take into account as well. More specifically, there has been a growing focus on fraud associated with smaller cryptocurrency exchanges. Additionally, some companies can no longer meet investors’ expectations at this time, forcing them to declare bankruptcy. It is a warning sign as to what the future holds for these companies, by the look of things.
Addressing all of these issues and concerns may prove quite troublesome. Although the PBoC has issued guidelines for initial coin offerings and cryptocurrencies over the past few months, it has become apparent that there is still a lot of work to be done in order to bring more legitimacy to this industry. This is only compounded by the growing number of trading platforms offering services to Chinese individuals who do not reside in the country.
Even if companies aren’t forced to shut down, it is evident there is a worrisome future ahead for cryptocurrency firms in China. Not every company focusing on cryptocurrency or blockchain technology will succeed, although that should not really come as a surprise to anyone at this stage. When it comes to cryptocurrency exchanges, the coming months and years will be crucial, both in China and the rest of the world.