Although the recent crackdown on cryptocurrency transactions in China has largely been dismissed as another round of “China FUD,” sources in surrounding countries say there’s a lingering regional chill.

A source at a Singapore-based decentralized trading protocol said their clients have been wary of potential legal ramifications. The source was granted anonymity because of the risk to their mainland clients.

The source in Singapore first started hearing rumors about the Chinese government’s plans to further curb cryptocurrency transactions in May, around the time the government crackdowns started on crypto mining. They were told to expect something more severe before the end of the year.

“The impact was almost immediate once the word got out,” they told Crypto Investor. “WeChat chats between our team and various Chinese-based partners were dissolved and moved to Discord and Telegram. Crypto price discussion groups renamed and ostensibly pretended to be gaming chats.”

The ban, which prohibits crypto transactions and services in the country, was announced by the People’s Bank of China on Sept. 24. The writing has been on the wall for a long time. Even before the latest ban was announced, the country’s largest crypto exchange, Huobi, had decided to leave the country and stopped accepting new account registrations from China-based customers.

“It's the most serious action taken by the government so far. The West has been conditioned to dismiss regulatory changes by China as simply "China FUD" for the past few years, but this ban is no doubt a signal that China is not messing around this time,” said the Singapore-based source. “We are closely monitoring the situation, and the next three months will be absolutely critical in determining whether further actions will be taken by the government.”

Sang Lee, founder and CEO of Konstellation Network, a DeFi cross-chain capital markets protocol, said both the current and previous bans tend to coincide with mainland politics.

“Exchanges were tied to repatriation of funds, mining tied to energy usage and we also believe that the current ‘ban’ is tied closely to the release and support of the e-CNY,” he said, referring to the government-backed digital currency. “Due to the size of the market, there may be an over importance that is placed on these announcements, but we believe that there will be no longstanding negative effects.”

Less is less reliant on relationships with individual firms in mainland China than some of his peers. The company’s role in building blockchain infrastructure makes it less susceptible to regulation changes in individual countries.

“Given the nature of the industry and particularly within the post-COVID era remote work is becoming more prevalent,” Lee said about firms that have relocated since the ban was announced. “However, China does have strong digital firewalls which may make it difficult for teams to operate in China once outside. Having said that, I do believe that an evolving framework in regulations may change the situation in the future.”

Although the recent crackdown on cryptocurrency transactions in China has largely been dismissed as another round of “China FUD,” sources in surrounding countries say there’s a lingering regional chill.

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