July 14 marked the return of China mainland users to the Coinbase account registration pool. Now, the registration candidates may use their Chinese national identification and mainland addresses for verification purposes, instead of Chinese passports and a Hong Kong address as used before.
A New Step for Chinese Users
Thanks to this change, there is almost no barrier left for mainland people to join Coinbase. Beforehand, KYC limited the users to those who had Hong Kong documents, and that limited its reach in one of the largest internet markets worldwide.
Source: Bloomberg
By accepting national IDs, the company will bring its verification process up to regional exchanges’ standards. But, Coinbase has not announced any new trading pairs or means of deposit or ways to convert RMB at that moment.
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Why It Matters to the Exchange Landscape Mainland
China has been a firm supporter of cryptocurrency trading bans and the shutdown of cryptocurrency exchanges since 2021. Then again, Coinbase, an exchange in the US listed on Nasdaq, conforms to a dual US and international compliance regime.
The idea of expanding access to new registrants is that, rather than local trading, they are betting on customer expansion and wallet services.
The competitors like Binance, OKX, and Huobi are under pressure also to improve their KYC and compliance tools because of the move. When it comes to the developers, broader access may mean a raise in demand of wallets and custodies, but at the moment, liquidity remains offshore.
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Regulatory Context and What Comes Next
This development is timely with global exchanges changing their strategy for Asia amid a regulatory divide. It would be very interesting to see how the change would harmonize with the Chinese policies for one thing, restrictions on capital flows, on the other. Besides Coinbase at this time, hasn’t laid out its roadmap for local payment infrastructures or regulatory interactions.
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