After recent statements by the People’s Bank regarding the future of bitcoin exchanges in China, mainland Chinese exchanges BTCChina and ViaBTC announced they would suspend their trading platforms at the end of September.
Predictions are now that other exchanges could follow, shutting down what was once the world’s busiest cryptocurrency exchange market.
Exchanges to Close 30th September
ViaBTC announced today (translated) it had “carefully studied the spirit of the [PBOC] announcement” and decided to impose self-suspension to comply. It will stop accepting account registrations and begin finalizing transactions from 25th September, before closing on the 30th.
BTCChina support confirmed to Bitsonline that the action is in response to the regulation change. However staff could not say whether the suspension would be temporary or permanent.
Users will be able to withdraw cryptocurrency balances to private wallets, but not fiat. Those with CNY balances are advised to convert the funds to bitcoin, litecoin, Ethereum or Bitcoin Cash in order to withdraw.
BTCC and ViaBTC Mining Services Not Affected
Both ViaBTC and BTCChina also operate mining pools and offer cloud mining services. Those services will not be affected.
BTCChina is run by Bobby Lee, brother of Litecoin founder Charlie Lee, and is dedicated to the mainland Chinese market. At one stage in 2013 it was the largest Bitcoin exchange in the world by trading volume.
Its announcement yesterday read:
Effective immediately, BTCChina will not be registering new accounts and will cease trading on the 30th of the month.
There may be some confusion regarding the relationship between BTCChina and BTCC, which share a logo and history but are separate business entities. BTCC is registered in Hong Kong and serves USD traders on the international market. It appears BTCC will continue as usual.
2/ BTCC products, including BTCC Pool, are not affected by this change. Please contact us at firstname.lastname@example.org if you have any questions. https://t.co/r3HvINU20p
— BTCC (@YourBTCC) September 14, 2017
When Bitsonline initially contacted BTCChina support about the company’s closure, but said the name “BTCC”, we were given a day long run-around, in light of the situation:
“To clarify, BTCC is not BTCChina. if you have concerns with BTCC, please email email@example.com.”
BTCChina’s announcement seems to have confirmed many Bitcoiners’ worst fears about the recent PBOC focus on digital assets. Bitcoin’s price has dropped over 30 percent since flirting with $5,000 USD just two weeks ago.
The price had already dropped on Monday’s news that the PBOC would ban the sale and trading of ICOs, with other smaller exchanges already announcing plans to repay investors and close their doors. It was hoped, however, that the biggest exchanges, who primarily dealt with the major cryptocurrencies, would be exempted from the regulatory crackdown.
Reasons for Sudden Change Still Unclear
The specific reasons for the stance of the Chinese authorities are not crystal clear, apart from the supposed risks of token funding. Chinese investors have pumped around $400m into ICOs since January. Some are speculating that it is a protective measure designed to insulate the yuan from continued depreciation; however the cryptocurrency market is still small relative to the money supply or the stock and property markets.
It wouldn’t be Bitcoin if there weren’t a multitude of further theories — especially with news relating to the notoriously opaque PBOC. Due to the fact mining operations have not been affected, some have floated the idea that licenses will eventually be granted to some exchanges.
Crystal Ball: In a few months, China will proly "unban" exchanges and issue "license" to enforce AML/tax stuff.
Coz #Bitcoin is unstoppable.
— Squeeze (@cryptoSqueeze) September 14, 2017
Bitmain, the Chinese mining behemoth run by Jihan Wu, also noted the policy requirements of the PBOC were in place before Bitcoin. He tweeted:
None of the Bitcoin exchanges in China has the licenses that should be required for order book exchange. Such law is older than Bitcoin.
— Jihan Wu (@JihanWu) September 12, 2017
Bitmain has already adapted to the new environment by announcing it would only be accepting payment for mining equipment by CNY, and not BTC.
While the general consensus seems to be that Bitcoin, the metaphorical Honey Badger, will simply route around China, some personalities in the space defiantly took the opportunity to note the implications for China as a result of their actions.
If China wants to keep playing games and fall behind with crypto, I say adios. The train will keep moving without them.
— Chris Dunn (@ChrisDunnTV) September 14, 2017
China wants to cede crypto market to Japan? Great. We don't need a bad actor like China slowing crypto down. https://t.co/i4pcxEVDBR
— Max Keiser (@maxkeiser) September 8, 2017
Others took aim at Chinese exchanges as a whole, noting their practices were never considered legitimate.
When your exchange fakes volume and then regulators start breathing down your neck then it probably is time to pack it in.
— Bryce Weiner (@BryceWeiner) September 14, 2017
It must be noted that the exchanges were not directly ordered to close — the two mentioned here took the action of their own volition after the PBOC’s announcement. Other major exchanges like OKCoin and Huobi are due to meet with regulators in the coming days.
What are your predictions for both Bitcoin and China in the coming months? Share them in the comments.
Images via Cryptowat.ch, Pixabay