Chinese Bitcoin exchanges have operated on the promise of not charging trading fees for quite some time now. Instead, most trading platforms made a lot of money from their margin trading opportunities. Now that most exchanges no longer offer high-value margin trading, they also see a large source of revenue disappear. It is likely a lot of these platforms will reintroduce trading fees over the coming weeks.
Operating on 0% trading fees was never designed to be a long-term solution for Chinese Bitcoin exchanges. China is one of the few regions in the world where offering this business model made sense. After all, platforms could offer leveraged margin trading on Bitcoin, and take a substantial cut of those amounts. That situation has come to change in recent times, thanks to the PBOC.
It is evident the golden era of Chinese Bitcoin trading is coming to an end very soon. Gone are the days of 50x leveraged Bitcoin margin trading. Such tools only created wild speculation and volatile price swings, which is cause for concern by the PBOC. Once the financial institution began its investigation of Chinese Bitcoin exchanges, margin trading features were quickly disabled across all platforms.
Back To Trading Fees For China?
Unfortunately for these exchanges, that also means their revenue is drying up. Since there are no trading fees, companies are making little to no money from Bitcoin activity. At the same time, the infrastructure needs to be maintained, and staffers expect a paycheck at the end of the month. Money has to come from somewhere, and it appears there is only one logical solution.
According to CNR, it is possible Chinese Bitcoin exchanges will introduce trading fees once again. For now, it is unclear if and when this will happen. There is no indication as to what level of fees we can expect either. Most international exchanges charge a 0.15% fee on every trade, which will lower depending on how volume the user generates.
Assuming Bitcoin trading fees will become a factor again, it is only positive news for Bitcoin as a whole. No margin trading combined with fees for buying and selling cryptocurrency will stabilize the market. Volatility has been minimal over the past few days, although there have been a few sharp price drops. Once traders lose a portion of their assets in fees, such events may become less frequent.
All things considered, it looks like Chinese Bitcoin exchanges are evolving in the right direction. Less speculation is beneficial for Bitcoin enthusiasts all over the world. Moreover, it paves the way for the entire world to stop looking at Bitcoin as a toy for day traders, and give cryptocurrency the proper respect it deserves.