China Puts At Least Limited Ban on Bitcoin Exchanges
A bizarre event happened recently in the cryptocurrency market, as Chinese authorities announced plans to shut down local cryptocurrency exchanges, with bitcoin falling in among the lot. That news was enough to take quite a bit of wind out of bitcoin’s sails—and sales—but as it turns out, the news may not be as bad for bitcoin et al as some might expect.
First, a report from Zerohedge via Twitter noted that none of the three biggest bitcoin exchanges in China had actually received any kind of regulatory notice about shutting down trading. That was word as of about 4:00 AM Monday morning, and given that that’s roughly sometime in the afternoon in Beijing, that’s enough to get some people wondering how much of this was posturing.
Subsequent reports, meanwhile, put some more light on the concept. Word from Fortune magazine noted that the plans are indeed official, but won’t be quite so far-ranging. Indeed, the ban isn’t slated to hit over-the-counter (OTC) trades at all, which tend to be high-volume trades. So some are suggesting here that the ban isn’t so much on trading bitcoin in China, but rather on regular Chinese citizens trading bitcoin.
Apparently, further reports noted, Chinese citizens were using bitcoin in a fashion that the Chinese government likely took a dim view of: moving cash outside of the country without government oversight and accompanying interference, as well as as a hedge against the yuan’s value. The Chinese government, meanwhile, cited “too much disorder” for the crackdown, which sounds like a polite way of saying “too much risk of financial revolt”.
So basically, if the various reports hold water, this is another crackdown move from the Chinese government to restrict access to payment products that aren’t yuan. We just saw similar moves in the mobile payments market, and now we’re seeing these again with a tightening of access to the bitcoin markets. Throw in the recent ban against initial coin offerings (ICOs) in the country and China’s government is starting to look a little terrified of financial technology.
Considering the values at stake, well, that’s to be expected. A means to cut a government’s lifeblood—tax dollars—can’t be reacted to lightly, even if it does end up leaving the nation’s honchos looking downright techno-phobic.