The People’s Bank of China is still pursuing Bitcoin exchanges

By February 13, 2017Bitcoin Business
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The People's Bank of China (PBOC) has been hounding domestic bitcoin exchanges for some time now, pressuring them to ensure compliance with existing financial regulations and issuing warnings about the risks of bitcoin trading.

In fact, just this week, the PBOC held a closed-door meeting with several then-unnamed exchanges to discuss its concerns. This increased scrutiny has prompted some exchanges to take measures to preempt a feared regulatory crackdown.

Now, two new developments have emerged in this ongoing saga:

  • The PBOC revealed the details of its private meeting. In a statement on its website on Thursday, the PBOC said the meeting had been with nine of the country's smaller bitcoin exchanges, and released their names, Reuters reports. The PBOC said the parties discussed risks and issues in the domestic bitcoin market, and that it warned the exchanges that they face closure if they violate regulations by engaging in money laundering and margin lending. After the meeting, a number of the exchanges followed the example set by larger competitors last week, and introduced fees, according to CoinDesk.
  • OKCoin and Huobi suspended cryptocurrency withdrawals on their exchanges. Also on Thursday, the major exchanges released statements announcing that they would suspend bitcoin and Litecoin withdrawals on their exchanges for a month, Bloomberg reports. Both exchanges explained the suspension would last while they "upgraded" their systems to ensure they are compliant with anti-money laundering, foreign exchange management, and other financial rules. The announcement caused bitcoin prices to drop sharply on Thursday morning, from $1,063 at the start of the day to $946 by mid-afternoon.

These developments suggest that the PBOC is preoccupied with ensuring existing regulations are enforced. The PBOC's emphasis to date has been on bitcoin exchanges abiding by existing financial regulations, rather than on introducing new market-specific rules for these players. This indicates both that the exchanges may be in violation of these rules, and also that oversight of the industry has not been adequate. As such, it is perhaps likely that the next chapter in this story will be tougher penalties for transgressors, rather than the introduction of any new regulations for bitcoin exchanges.

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