28th September 2021 > > China "bans" cryptos.

tl;dr

A few real-life implications of China's crackdown on cryptos.

Market Snap

Market Wrap

With UST now 21bps wider in just a week – taking 2 points out of 10-year bond portfolios – pension fund managers and corporate treasury mandarins are getting very worried about their year-end bonuses.

My core fear for risk assets for many years now has been that at some point markets will stop believing that central banks can continue to manipulate the long end of the yield curve.

I do hope that this recent move wider is just a normal fluctuation, but we need to stay vigilant.

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Meanwhile that move in the perp funding rate may look superficially small, but that is a dramatic one-day change, probably in response to 10-year UST. Perp funding rates are now a sea of green, so again we must stay vigilant.

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Who can chart the delta of perp funding rates and UST 10 years for me? I don’t think I have the data feeds but it could prove very interesting?

Occasional Series – Paul the Octopus has been usurped

It has been claimed (by unverified sources) that Paul became a sashimi dish.

I suspect that won’t happen to Hammy the Hamster:

https://www.twitch.tv/mr_goxx

Joshing aside, this is an excellent website.

I can watch it for hours.

I have been watching it for hours.

Seriously, when something happens, I promise you will be excited.

(*) Check below for a pic of the action that I took all by myself as it was happening live.

Occasional Series – Black Lives Matter

I know, I know. But this needs to be said.

I recognise that a core part of the BLM movement is anti-racist.

But they are not alone in that claim. There is no respectable political movement which stands for anything other than being anti-racist.

My main criticism of BLM is their Marxist ideology with which I do not agree.

[As an aside I would make the point that by definition any crypto enthusiast is anti-Marxist and therefore anti-BLM but I know this sentence is going to get me into even more trouble …]

My second criticism is that vocal supporters of BLM shout that if you disagree with them, that makes you a racist.

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I have been told that my criticism of the Marxist ideology central to the BLM movement is racist, which kind of proves my second point.

To end this debate once and for all, my stance is that one can be anti the BLM movement and anti-racist at the same time. The two are not mutually incompatible.

For the person who sees this issue in a different light to me, I respect your right to disagree with me, but I take note that you do not reciprocate that respect.

There is little point in taking the discussion any further.

Curious Cryptos’ Commentary – Real-life applications of blockchain technology

You mean apart from Hammy the Hamster???

Curious Cryptos’ Commentary – That China “ban” and Huobi

The news that China announced its 19th crackdown on cryptos last Friday continues to have a wider impact other than just price action.

Huobi is right at the top of my second tier of crypto exchanges. Relatively easy to use and with low fees, the only real issue I have with it is that like all Chinese companies, the government is effectively in control.

The CCC and all crypto enthusiasts believe in decentralisation as an effective barrier to governments’ dead hands. But as a place to buy and sell cryptos (NOT store cryptos) Huobi is hard to fault.

Huobi has announced that it is effectively shutting down all operations in China, and that all accounts held by anyone living in China will be closed by the year end.

Curious Cryptos’ Commentary – That China “ban” and DeFi

Hard on the heels of the 19th crackdown on cryptos announced by China on Friday, there is on-chain evidence of significantly greater activity in the DeFi space from Chinese crypto investors.

Anyone with the slightest understanding of DeFi knows that “banning” cryptos cannot work.

To interact with DeFi, all you need is to have private keys to your online wallet (typically MetaMask) or you connect your cold storage (the CCC heartily recommends Ledger Nano X) and off you go, far from the prying eyes of the civil servants and bureaucrats.

What you cannot do of course is on-ramp into cryptos from fiat using your local bank if your government has “banned” cryptos.

As we have seen in the past (see CCC 20th February 2021 and several other issues – back copies available on request) “banning” cryptos simply results in the local price demanding a premium over the global price. In the case of Nigeria’s first ban, very quickly reversed, that premium was 60% or so.

Curious Cryptos’ Commentary – That China “ban” and Binance

After China banned cryptos for the 19th time on Friday, Binance got involved.

This is the same Binance that has a long list of countries (UK, US, Holland, Italy, Malaysia, South Africa and many more) complaining about the company’s lackadaisical attitude towards regulation and legislation. Regular readers (see CCC 21st September 2021) know that these problems are entirely down to the immature behaviour of Changpeng Zhao, CEO of Binance, who needs to step down from his role as soon as possible.

The UK’s financial services regulator, the Financial Conduct Authority (FCA) has described Binance Markets Ltd. as “not capable of being effectively supervised”.

That’s what my Mum and Dad used to say about me.

Anyway, Binance has now shut down all operations in Singapore, blamed on the recent edicts by the People’s Bank of China.

Expect other exchanges in similarly located countries to follow suit.

Curious Cryptos’ Commentary – That China “ban” and HSBC

HSBC, though its headquarters are in London and hence its lead regulator is the FCA, has a long and rightly proud history of its Asian roots. The clue is in the name of course.

HSBC senior management would have taken note of the 19th ban on cryptos by the Chinese government.

It is impossible to maintain such a heavyweight position in Asia without the agreement of China and its politicians.

I suspect that anyone who banks with HSBC might find the opportunities to on-ramp to cryptos will diminish somewhat going forward, wherever in the world you are based.

(*)