Bitcoin Price Rises Despite Continuing Rumors About Shut Down of China's Bitcoin Exchanges | Coinspeaker

Bitcoin Price Rises Despite Continuing Rumors About Shut Down of China’s Bitcoin Exchanges

| Updated
by Maria Konash · 5 min read
Bitcoin Price Rises Despite Continuing Rumors About Shut Down of China’s Bitcoin Exchanges
Photo: Jim McDonough / Flickr

Rumors about Chinese government’s plans to ban trading of bitcoin and other virtual currencies on domestic exchanges no longer affect Bitcoin price.

Continuing reports about China’s ICO ban and its plans to halt trading of bitcoin and other virtual currencies on domestic exchanges made markets for bitcoin and other cryptocurrencies fall over the course of September 8th till yesterday, September 11th.

The buzz about possible disruption of the whole Chinese exchange ecosystem was caused by its national news source Caixin, which stated on Friday, September 8th, citing no definite sources though, that regulators are looking to shut down the exchanges.

According to the source, the news were dispatched to other sources, yet, at the same time, no exchanges in China (including China’s big ‘three’ bitcoin exchanges – OKCoin, BTC China and Huobi ) have received any notifications from the Chinese government, which brings the trustworthiness of the news reported by Caixin into a big question.

Adding more details to this already uncertain situation, some sources reported on Monday that while Chinese authorities are planning to ban bitcoin trading on domestic exchanges, they have no plans to stop non-commercial, over-the-counter transactions.

All in all, China’s central bank hasn’t made any official confirmation or denial yet, which, given 96 hours passed, leaves market sentiment quite positive, as in this case no news (official confirmation or denial) is definitely good news.

Still, the news, despite its unproved character, caused some uncertainty within crypto community which resulted in bitcoin (and the whole crypto market’s) fluctuations.

No wonder that the steepest drop was seen on Friday, when the currency dropped from $4658 to $4084 during the course of the day. Following the fall, token reached the minimum of $3969 on Sunday. Currently, according to the data from CryptoCurrency Market Capitalizations Index, Bitcoin shows the signs of recovery trading at about $4286 per token, gaining almost 4% over last 24 hours.

CoinMarketCap also reveals that, logical enough, China’s leading bitcoin exchanges, following Friday’s news, yesterday reported the lowest prices for the token. OKCoin, for example, traded bitcoin for $3883.41, Huobi and BTCC, in their turn, reported prices of $3892.04 and $3873.40, correspondingly. However, positive movements in bitcoin’s price haven’t passed by even these exchanges. At press time the token is traded for $4078 at OKCoin and Huobi, making even more – $4088 – at BTCC.

As it has been mentioned, other cryptocurrency markets saw notable declines as well. Ether prices, for example, fell from $329 to $289 on Friday, hitting the lowest level of $269 on Sunday. Today ether gained almost 5 percent of its price trading at $304 at press time.

The total cryptocurrency market capitalization, which was also affected by the news, fell from $165 billion on Friday to 135 billion on Sunday. Having reached today’s peak on 07:47:00 UTC, it makes almost $153 billion.

To recap, the rumors about China’s exchanges’ potential shot down were preceded by the last week’s decision of People’s Bank of China (PBoC) to ban ICOs and declare them illegal, asking all related fundraising activity to be halted immediately.

Then Nick Evdokimov, Vision Director at ICOBox, commented:

The Chinese Central Bank’s decision to enact a ban on ICOs did not come as a complete surprise. But as ICO professionals we realize that the consequences for our Chinese peers will be very dire, and we sincerely regret this turn of events. The full significance of the recent move is hard to forecast at this point, but we may anticipate that the new law will have a huge effect on the Chinese ICO market, causing many of its participants to turn to global ICO service providers to organize and conduct their token sales.

When speaking about the new legislation Mr. Evdokimov really got to the point, as, several days later, Chinese official stated that the government is considering a development of a new licensing program which is believed to be an appropriate means for creation of controlled and regulated environment, where use of ICO fundraising instrument could be empowered again.

In case they decide to take this way of action, its licensing program would resemble that of the New York State Department of Financial Services (NYSDF) called BitLicense. Impractical and sometimes too strict policies of this US-created program, for the context, made many startups leave the state.

Similar situation may happen with Chinese startups having not enough funds or willingness to deal with new game rules, which can simply move to such “ICO-friendly” destinations as Hong Kong, Singapore or Japan.

Zeev Kirsh, Legal Counsel at Cryptonomos, rightfully stated:

The decision of the Chinese regulators to ban all ICOs is likely to have a negative impact on the global ICO market. It will mean that there will not be nearly as many, if any, Chinese startups conducting token crowdsales. This move on the part of the Chinese Central Bank will hold back Chinese innovation at home, and may direct crypto funds towards ICO markets elsewhere, for instance, the US. The US regulator SEC by and large stayed out of the ICO market, only occasionally stepping in to protect investors from certain questionable token sales. Generally, the agency tends to support free enterprise rather than create unnecessary burdens.

All in all, given the Chinese government’s experience of banning and following approving of a number of innovative technologies (including ban of bitcoin in 2013), it’s very likely that China will eventually resume ICOs by rolling out a licensing program.

Bitcoin News, Cryptocurrency News, News
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