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The People’s Bank of China found some violation of rules in the operations of major bitcoin exchanges.
The Chinese press informs about the irregularities in the operations of major bitcoin exchanges, based on the reported claims from the People’s Bank of China (PBOC). This operational interruption has resulted in abnormal fluctuations in the market.
JF Daily reports that BTCChina turned out to have been operating beyond the scope of its business by offering loans. The violation of rules was found during a preliminary inspection by the Shanghai branch of the PBOC. The report also mentions the lack of implementing a 3rd party depository of investors’ funds.
PBOC Shanghai called for increased attention of both institutional and individual investors and traders to the risks inherent with BTC China.
BTCChina is not the only bitcoin exchange that fell under suspicion. Hexun published a separated report saying about the inspection of other two exchanges, OKCoin and Huobi. The PBOC considers margin trading, a loan feature that all three platforms had provided, as a violation of rules and the cause for bitcoin’s recent volatility. The inspection showed that the above-mentioned exchanges had not established sufficient anti-money laundering measures.
As a result of the PBOC’s visits, BTCChina, OKCoin, and Huobi have stopped margin trading and futures trading.
Bobby Lee, Chief Executive at BTCChina, also said that the three exchanges had discussed introducing trading fees although they had yet to reach a conclusion. Bitcoin normally trades at a premium in China as the lack of trading fees encourages volumes and boosts demand.
The latest update of the PBOC’s investigations into bitcoin trading in China resulted in the rise of the cryptocurrency price. Currently, it is traded at $895, according to Coin Market Cap.
The CryptocoinsNews informs about the inspection response of BTCChina on its Weibo account: “Pertaining to the PBoC Shanghai headquarters announcement: BTCChina will continue to actively cooperate with the PBoC inspection related departments, and carry out rectification work. BTCChina is currently functioning normally.”
The value of bitcoin decreased by about 10% a week ago when The People’s Bank of China only announced its plans to closely monitor domestic bitcoin exchanges. The post on the website unveiled the meeting of PBOC with BTCC, Huobi and OKCoin, to investigate whether there is market manipulation, unauthorized financing, financial security risk, money laundering, or other issues.
At once, bitcoin dropped from about $910 level to the level of $785.
The Chinese government had earlier talked about its intention to stem capital outflows that brought its national currency reserves to their lowest since 2011.