Chinese Bitcoin Exchange Ban Partly Confirmed
RegulationBit News Today2 min read
Issued by the Beijing office overseeing financial risk, the directive specifies that exchanges must announce a schedule to stop trading and halt new user registrations by midnight September 15. Before September 20 at 6 PM, they must submit detailed risk-free clearing plans to the office, close other non-essential bank accounts, and designate a single bank account for depositing user funds. The exchanges are then to provide daily progress reports to local authorities.
The Chinese government has issued strict regulations to major Bitcoin exchanges this week, demanding them to close their platforms by September 30.
Before the order, several major exchanges including BTCC, Yunbi and ViaBTC had already announced their intention to shut down. OKCoin, the largest exchange by volume in China, reported no new operational developments, while third-ranked Huobi.com told Caixin it had not received an official notice ordering it to close. More cryptocurrency trading platforms in China are set to close, with 15 outlining their formal exit in a policy document reviewed by Caixin and confirmed by a source close to regulators. However, sources note the government's move is only targeting exchanges and trading can continue off the exchanges.
The crackdown comes as part of China's ongoing scrutiny of cryptocurrency trading. In September, China placed a freeze on domestic initial coin offerings, designating them an illegal method of fundraising. Regulators also moved months earlier to impose anti-money laundering restrictions on exchanges. Major institutions were barred from bitcoin trading in China in December 2013, and trading was halted for four months in 2017 because of security concerns.
The move highlights the extensive role China plays in the global Bitcoin market. China's three largest exchanges account for 60% of all local trading volume, with China representing 30% of global Bitcoin trading volume in July, according to a government-backed industry group. Bitcoin and most other digital currencies had been declining since early September, following reports that Chinese officials intended to shut down cryptocurrency exchanges. The virtual currency dropped as low as $2,972 on a Friday—a 40% decline from a peak of $5,000 earlier in September—prior to rebounding to roughly $3,600 that afternoon. In September, bitcoin slid by as much as $2,000 amid anxieties over a Chinese crackdown, with remarks by J.P. Morgan CEO Jamie Dimon also stoking bearish sentiment. The cryptocurrency sector drew heightened scrutiny in 2017 following surging valuations for bitcoin and Ethereum as well as an ICO fundraising boom that exceeded $1.7 billion that year.
