WSJ, Bloomberg Latest to Claim Bitcoin Exchange Crackdown in China

Javier Stokes
September 12, 2017

According to the reports, the ban will be limited to exchange-based trading and will not affect over-the-counter transactions.

Within a week since the announcement of PBoC was released, state-owned financial news publication Caixin reported that PBoC has been planning to ban all of the local bitcoin exchanges and trading platforms.

One person close to officials of China's central bank and various cybersecurity bodies said that "too much disorder was naturally a basic reason" for the ban.

Notably, Bobby Lee, CEO of China's oldest bitcoin exchange, BTCC, posted a poll on Twitter suggesting that he is not entirely convinced by the news. While existing users will likely still trade, according to Zhou Shuoji, a founding partner at FBG Capital interviewed by Bloomberg, it will make it more hard for new users to start trading Bitcoin-thereby limiting Bitcoin's potential growth.

While bitcoin users will still be able to trade cryptocurrencies in China without exchanges, the process is likely to be slower and come with increased credit risk, analysts said.

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While Beijing's motivation for the exchange ban is unclear, it comes amid a clampdown on financial risk in the run-up to a key Communist Party leadership reshuffle next month.

If you were wondering why the price of Bitcoin dropped faster than Ronaldo when he gets looked at by opposing defenders, turn your attention towards China. Bitcoin has jumped about 600 percent in dollar terms over the past year, part of a broad surge in virtual currencies that has fueled concerns of a bubble.

China's influence on global markets is not restricted to just traditional currencies, with the country's biggest exchanges accounting for a fifth of all transactions over the course of the past month. As regulations tightened, China's share has slid to less than 30%. Unfortunately for Bitcoin, the Chinese government is not a fan of cryptocurrencies, which are mostly traded by Chinese citizens who are hedging against falls in the yuan.

OKCoin, BTC China, and Huobi, the largest Bitcoin exchanges in China, told Bloomberg on Monday that they haven't been informed by authorities about any ban on trading.

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