After reports of all Bitcoin-to-fiat Chinese Exchanges being forced to shut down over the past week, the verdict has come through…unfortunately, it appears true. According to a leaked document sent from “The Office of the Leading Group of Beijing Internet Financial Risks Remediation” on Sept. 15, 2017, which reads:
“1. Before 20 September 6pm, exchanges shall come up with a detailed risk-free clearing plan, and send this plan to the office. Exchanges shall deal with their claims and liabilities properly, and insure that investors’ funds and virtual currencies are safe.
2. Before 20 September 6 pm, exchanges shall determine a bank account, which will be used for depositing user funds. All other accounts in banks and other non-bank payment service providers shall be canceled and reported to the Business Management Department of People’s Bank of China.
3. Before 15 September midnight, exchanges shall publish closing announcements, and announce a schedule to stop the trading of all virtual currencies. New user registration shall be stopped immediately after the announcement.
4. Shareholders, cotrollers, executives, and core financial and technical staff of exchanges shall cooperate fully with authorities during the clearing, while staying in Beijing.5. Exchanges shall report their developments daily to local authorities before the clearing is completed.
6. Exchanges shall save all user trading and holding data, and send it to local authorities immediately in DVDs.”
Three exchanges that have announced their closure so far are BTCC, viaBTC and Yunbi. Other exchanges like Huobi and OKCoin have indicated they will halt Bitcoin-to-fiat trading whilst continuing altcoin trading.
BTCChina Exchange and BTCChina Blockchain+ have enough funds to accommodate all customer withdrawals, including CNY, BTC, LTC, BCC, & ETH
— BTCC (@YourBTCC) September 15, 2017
The latest developments come following the news of the People’s Bank of China halting all ICOs (Initial Coin Offerings) in the country until a clear regulatory framework can be built for them. According to the People’s Bank of China, the selling of decentralized tokens is “illegal and disruptive to economic and financial stability”.
China, being the setter of trends in the Asian cryptocurrency markets, may just be setting the stone for more regulations and closures in other countries. South Korea, for example, announced they are closely monitoring the ICOs and stated in a meeting there may be possible regulations.
The current events unfolding are as shocking as they are sudden. Almost overnight, the cryptocurrencies landscape has changed and now we are potentially moving into a new phase. While China does not hold the top volume spot anymore, that award goes to Japan and South Korea, the moves the Chinese government is making may cause a ripple effect.
Lead developer of Komodo JL777, who is creating a dICO (decentralized Initial Coin Offering) and Atomic Swap platform to fight back against recent regulations had this to say:
“China’s actions show how dangerous it is to believe that governments will act rationally when it comes to cryptocurrencies. If a country is in a difficult situation it can always just print more money, but cryptocurrencies are changing that equation. It used to take an entire country to print money, now any small group is able to issue new crypto with a (d)ICO. We will go from having dozens of very large fiats to thousands or even millions of different cryptos. Hopefully, it will be a smooth transition.”
As a result of the recent actions by the authorities in China, the Bitcoin price has plummeted dramatically with BTC dropping $1000 in one week. This is unfortunate due to the incredible buy support in recent months that has pushed Bitcoin to new all-time highs. While China’s moves on Bitcoin exchanges may be scary for investors, we may be seeing a nice recovery in the works.