Tue, Sep 12, 2017 - Page 1 News List

Domestic bitcoin exchanges to be banned in China

Bloomberg

China plans to ban trading of bitcoin and other virtual currencies on domestic exchanges, dealing another blow to the US$150 billion cryptocurrency market after the country outlawed initial coin offerings last week.

The ban will only apply to trading of cryptocurrencies on exchanges, according to people familiar with the matter, who asked not to be named because the information is private.

Authorities do not have plans to stop over-the-counter (OTC) trading of virtual currencies, the people said.

The People’s Bank of China said it could not immediately comment.

Bitcoin slumped on Friday after Caixin magazine reported China’s plans, capping the virtual currency’s biggest weekly retreat in nearly two months.

The country accounts for about 23 percent of bitcoin trades and is also home to many of the world’s biggest bitcoin miners, who confirm transactions in the digital currency.

“Trading volume would definitely shrink,” said Zhou Shuoji, Beijing-based founding partner at FBG Capital, which invests in cryptocurrencies. “Old users will definitely still trade, but the entry threshold for new users is now very high. This will definitely slow the development of cryptocurrencies in China.”

While Beijing’s motivation for the exchange ban is unclear, it comes amid a clampdown on financial risk in the run-up to a key Chinese Communist Party leadership reshuffle next month.

Bitcoin has jumped about 600 percent in US dollar terms over the past year, part of a broad surge in virtual currencies that has fueled concerns of a bubble.

The People’s Bank of China has done trial runs of its own prototype cryptocurrency, taking it a step closer to being the first major central bank to issue digital money.

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