Several meetings between the People’s Bank of China and Chinese Bitcoin exchanges have resulted in increased speculations about the prospects of Bitcoin development in the Asian market. The closed-door meetings resulted in Huobi and OKCoin announcing that all Bitcoin withdrawals would be suspended indefinitely.
Bitcoin community couldn’t but reacted on these actions arousing a great deal of confusion about China’s relationship with Bitcoin and other non-centralized cryptocurrencies. The cryptocurrency price is now keeping close to $1,000 barrier, making $1,003 as of the moment of writing.
The statement by Huobi (google translated) says: “According to regulatory authorities, “Bitcoin trading platform shall not violate national anti-money laundering, foreign exchange management and payment and settlement and other financial laws and regulations” requirements, the network will be strictly in accordance with relevant laws and regulations, combined with industry experience, the industry counterparts bit Money laundering regulations, a comprehensive upgrade platform for anti-money laundering system to effectively prevent and combat the use of Bitcoin for money laundering, exchange, pyramid schemes and other illegal activities.”
Huobi has unveiled three actions it is taking to avoid possible illegal transactions that may continue before the system upgrade is complete:
1) immediately from the moment, the fire network to suspend a comprehensive bit of cash and cash Lait cash business;
2) RMB cash withdrawal and other operations are not affected;
3) the system will be implemented immediately after the completion of recovery Bitcoin, Laite coin currency services, industry-standard development and implementation time is expected to 1 month, may also be substantially ahead of the development process.
The People’s Bank of China is taking actions to prevent violations of rules related to money laundering and foreign exchange management. While the ban on withdrawals was issued suddenly, Bitcoin exchanges in China have been scrutinized over the past few weeks. The Chinese government is concerned with the possibility to use the cryptocurrency for capital flight in the Chinese economy. Chinese investors could buy Bitcoin on Chinese exchanges and then sell them elsewhere, thereby bypassing the official limits on conversion between Chinese renminbi and other foreign currencies.
Indeed, the reason for such governmental concern is rather substantial – China accounts for about 98% of total global Bitcoin trading in the most recent six months. The supporters of the exchanges argue that transferring money abroad via Bitcoin can be challenging and expensive for investors due to poor liquidity.
Surely, the withdrawal suspensions affected the Bitcoin price. The announcements of Huobi and OKCoin resulted in the digital currency dropping below $1000 for the first time in many weeks. The exchanges estimate that the required upgrades will be completed within the next month or so, but the longer term future of Bitcoin in China is still unclear.