China’s Bitcoin Exchange Need to Stop Trading Virtual Currencies Amid Crackdown

| Updated
by Eugenia Kovaliova · 4 min read
China’s Bitcoin Exchange Need to Stop Trading Virtual Currencies Amid Crackdown
Photo: Lei Han / Flickr

Chineese authorities have ordered domestic Bitcoin exchanges to cease trading and immediately notify users of their closure.

Today, on September 15, all Chinese cryptocurrency exchanges have received the official instruction from the country’s authorities stating that they have to cease the registration of new users immediately. The schedule to stop digital currency trading within the country should be officially published at the exchanges’ websites. The instructions were signed by the Beijing city group in charge of overseeing digital finance risks and circulated online.

All the exchanges are also obliged to notify the authorities about the risk-free ways of user withdrawals and fund savings in order to protect investors from losses. According to the Security Times report, the platforms have to do that by Wednesday, September 20.

A leaked document issued by the office of the Leading Group of Beijing Internet Financial Risks Remediation has recently appeared on Chinese social media. It contains a list of steps the exchanges have to undergo during the closure. Below is the translation of the instruction:

  1. Before 20 September 6pm, exchanges shall come up with a detailed risk-free clearing plan, and send this plan to the office. Exchanges shall deal with their claims and liabilities properly, and insure that investors’ funds and virtual currencies are safe.
  2. Before 20 September 6pm, exchanges shall determine a bank account, which will be used for depositing user funds. All other accounts in banks and other non-bank payment service providers shall be canceled and reported to the Business Management Department of People’s Bank of China.
  3. Before 15 September midnight, exchanges shall publish closing announcements, and announce a schedule to stop the trading of all virtual currencies. New user registration shall be stopped immediately after the announcement.
  4. Shareholders, controllers, executives, and core financial and technical staff of exchanges shall cooperate fully with authorities during the clearing, while staying in Beijing.
  5. Exchanges shall report their developments daily to local authorities before the clearing is completed.
  6. Exchanges shall save all user trading and holding data, and send it to local authorities immediately in DVDs.

The document is signed: The office of the Leading Group of Beijing Internet Financial Risks Remediation, Sept. 15, 2017

The ongoing changes have already affected bitcoin prices, which are currently below $3000 level, according to the CoinMarketCap. As for exchanges’ prices, Bitcoin is trading at about $2904.64 on OkCoin, $2887.97 – on Huobi, and $2908.37 – on BTCC at press time.

Two leading exchanges BTCC and ViaBTC have recently announced their closure, claiming the regulatory statement issued by authorities on September 5 to be the reason of such a decision.

Yesterday Litecoin creator Charlie Lee tweeted that two leading Chinese cryptocurrency exchanges OKCoin and Huobi are meeting with regulators on Friday, despite the exchanges themselves claimed that they had not been contacted by authorities.

At the same time, the cryptocurrency news service cnLedger stated:

If OKCoin and Huobi do really suspend trading on their high-volume exchanges, they will join the BTCC, which announced the suspension of its exchange scheduled at September 30.

Yesterday BTCC posted a series of tweets announcing their decision to close domestic currency trading until September 30 :

The exchanges calmed down its users by adding that the changes would not affect other platform’s operations:

BTCC has also stated that its users will be able to get their money out even after the announced deadline of September 30, although the exchange suggests its users to withdrawal their funds as quickly as possible.

The news regarding one of the top-three bitcoin exchanges in China and one of top-five in the world has caused a lot of confusion within cryptocurrency community.

Some sources stick to the view that BTCC’s decision to stop trading has nothing to do with the rumors regarding exchanges being shut down. The real reason is believed to be BTCC’s recently launched cryptocurrency ICO platform, shut-down of which made the parent company undergo some changes as well. In such a way, the trading halt is considered to be temporary, despite no one knows how long this suspension will last.

Li Lihui, a senior official at the National Internet Finance Association of China and a former president of the Bank of China, told a conference in Shanghai that global regulators should work together to supervise cryptocurrencies. He holds to the opinion that “digital tokens like bitcoin, ethereum that are stateless, do not have sovereign endorsement, a qualified issuing body or a country’s trust, are not legal currencies and should not be spoken of as digital currencies as they can become a tool for illegal fund flows and investment deals”.

After bitcoin and other major cryptocurrencies had showed signs of recovery few days ago, regulatory uncertainty shook the crypto markets on Thursday, September 14, causing bitcoin price fall to below $3,000 at Chinese markets.\

Whether cryptocurrency is a “fraud” or it represents the future of finance, still remains unclear.

Bitcoin News, Blockchain News, Cryptocurrency News, News
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