Friday, January 27, 2023

People’s Bank Officials Visit BTCC, Bitcoin Price Drops

People’s Bank Officials Visit BTCC, Bitcoin Price Drops

The People’s Bank of China Shanghai headquarters today conducted an on-site investigation of bitcoin exchange BTCC. The joint inspection with the Shanghai Municipal Finance office reportedly looked at compliance issues at the company.

Also read: Korean Central Bank: Blockchain Would Cut Costs But Needs More Security

However, BTCC wasn’t alone. Officials reportedly visited other Chinese exchanges including Huobi and OKCoin. Spokespeople from the companies said the visits were a week-long inspection simply to understand the current investment and trading situation. All deposit, trading and withdrawal functions at the companies are continuing as usual.

BTCC later tweeted that the visits were routine, and nothing to worry about.

The bitcoin price, however, took a beating. After climbing back above $920 USD during Asian business hours, it crashed to ¥5789 ($835) on Chinese markets — perhaps in response to the action.

BTCC BitKan Price chart

A Chinese Bitcoin Deja-Vu

It’s not the first time a high bitcoin price has corresponded with Chinese regulatory action. In late 2013, as it previously soared above $1200, the People’s Bank announced new restrictions on bitcoin exchanges’ access to consumer bank accounts.

The PBOC issued a statement on its website that said (translated by Twitter user @cnLedger):

“The operation is focused on checking whether the company is operating beyond its scope, whether it is conducting the business of credit (loans), payment, remittance and/or other related business without necessary license or authorization, whether there is market manipulation, the implementation of anti money laundering system, financial security risks and so on.”

The PBOC has kept a close watch on bitcoin exchanges since 2013, warning them and their customers against engaging in risky price speculation.

Response to Yuan Volatility?

The action may also be in response to price volatility in China’s national currency, the yuan, in recent weeks.

Sandy Liang of bitcoin information service BitKan agreed, saying:

“I think (bitcoin) price is not their reason, just the result. It’s maybe because of the strict foreign currency exchange controls in China lately. Also, the high price in the last few weeks may be a trigger, making the government notice bitcoin again.”

Offshore trading in the mostly price-controlled currency has seen its value drop as low as 6.7815 to $1 USD, out of step with the “official” exchange rate.

Such volatility could see Chinese attempt to move their money offshore or look for other investments. In new capital controls due to start in July, banks will have to report cash transactions of 50,000 yuan or more (one quarter the previous amount required for reporting).

BTCC, formerly BTCChina, is one of the world’s oldest bitcoin exchanges. It has long touted its legal compliance and communication with Chinese regulators as a virtue.

We have reached out to BTCC for comment, and will continue to monitor this developing story.

What’s your opinion? Will the PBOC action discourage bitcoin investment in China, or have only limited impact? Let us know.

Images via Pixabay, BitKan

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