China: We’re Shutting Down Exchanges, but Bitcoin Still Legal
The bitcoin price plummeted by over $400 today after a Chinese news report claimed authorities would shut down major exchanges. However there has been no immediate action to halt business activity, and reports stated digital currency transactions remain legal.
Report Calls out Major Exchanges by Name
Chinese business and financial news outlet Caixin reported Friday (China time) that online exchanges trading currencies like bitcoin (BTC) and ether (ETH) would be closed indefinitely. The report mentioned the three largest exchanges — OKCoin, Huobi and BTCC — by name.
Notably, Caixin also stressed there will be no regulation against digital currencies themselves, and no prohibition on OTC (over-the-counter, or P2P) transactions.
Reuters reported that representatives at the “big three” digital currency exchanges said they had not received any direct notice from officials. Nor has there been any action to stop trading.
However, they also said that in 2013 and 2014 when China first began restricting their activities. It’s not standard practice for regulators to contact the affected companies directly — at least initially. Official media reports like Caixin‘s are effective at making intentions known.
Beijing Leadership Conference May Be Reason for Digital Currency Scrutiny
There may be wider events affecting the cryptocurrency industry in China, driving today’s announcement and recent bans on ICO activity.
The 19th National Congress of the Communist Party of China begins in Beijing on 18th October 2017. That’s only the second conference since cryptocurrencies even appeared, and the first since any became widely known and valuable.
These conferences, which only happen every five years, are significant events in China and have major political ramifications. It’s also where delegates elect and announce the next Chinese leader, and other important positions.
Although current General Secretary Xi Jinping is almost certain to continue for another five-year term, the Congress is a chance for define and strengthen political positions.
Like political campaigns anywhere in the world, candidates for various offices want to appear strong — and do not wish to be seen condoning risky or potentially illegal activities.
Right now, that probably includes digital currency exchanges and unregulated investment vehicles. Most in the cryptocurrency industry will be watching to see what happens after the conference, and if any changes will become permanent.
What’s causing all the recent Chinese regulatory activity? Let’s hear your opinions.
Images via Wikimedia Commons, Pixabay