China’s new blanket ban on all cryptocurrency trading and mining has resulted in crypto exchanges and service providers scrambling to sever business ties with Chinese clients.

Shares in a range of Chinese crypto-related firms plunged on the ban, which avoids loopholes left in previous regulatory crackdowns on the sector. However, industry executives noted that many companies had already shifted vital portions of their business outside China. In a joint statement on Friday, ten powerful Chinese government bodies said that overseas exchanges were barred from providing services to mainland investors via the internet and vowed to root out “illegal” cryptocurrency activities.

In response, Binance and Huobi Global, two of the largest crypto exchanges globally, stopped new accounts registrations by Chinese customers. Huobi also said that it would remove the existing ones by the end of the year. “On the very day we saw the notice, we started to take corrective measures,” Du Jun, Huobi Group co-founder, said in a statement to Reuters. Du did not estimate how many of its users would be affected but added that Huobi had embarked on a global expansion strategy many years ago and seen steady growth in Southeast Asia and Europe.

TokenPocket, a popular service provider of crypto wallets, also said in a notice that it would terminate services to Chinese clients that risk violating Chinese policies, adding that it would “actively embrace” regulation.

Some of the world’s largest crypto exchanges have originated in China. Still, Chinese authorities see cryptocurrencies as speculative instruments that lack intrinsic value, are prone to acute price moves, and are a means to circumvent capital controls. Chinese authorities have instead thrown their weight behind the development of an official digital currency.

Numerous regulatory actions have hit a range of sectors from gaming to tech to for-profit tutoring, making it very hard for Chinese mainland investors to buy or sell the assets unless they leave the country. It does not, however, declare ownership of cryptocurrencies as illegal. While cryptocurrency firms are facing increased oversight in the rest of the world, outright bans are rare.

“I don’t believe China’s approach will set a standard for how other countries approach regulating this space,” said John Wu, president of Ava Labs, a blockchain company.

Shares that took a beating include Huobi Tech, which plunged 22%, and OKG Technology Holdings Ltd, a fintech company that lost 19%. Nasdaq-listed Chinese crypto mining machine makers Canaan Inc and Ebang International tumbled 21% and 7%. 

Many Chinese crypto exchanges shut down in 2017, after China, once the world’s biggest bitcoin trading and mining center, banned such platforms from converting legal tender to cryptocurrencies and vice versa. Then in May 2021, China’s State Council decided to ban bitcoin trading and mining.

Flex Yang, founder and CEO of Babel Finance said that amid the crackdown, other types of Chinese crypto companies have been moving out of China over the past few months, adding that the impact from the latest policy would be “limited”. Earlier, crackdowns led to capital outflows in many Chinese exchanges.