After the official ICO ban, the Wall Street Journal reported that China was allegedly looking to shut down cryptocurrency exchanges. Shortly after the announcement, reports of bitcoin exchanges shutting down began to surface. BTCC, Yunbi, and ViaBTC had to shut down in accordance with a regulatory announcement issued on Sep 5th by the Chinese government.
BTCC took to social media with a set of instructions for existing users and confirmed that money could be withdrawn from the exchange even after the official Sep 30th closure date. However, it also urged them to withdraw it as soon as possible.
Furthermore, two of the 3 biggest cryptocurrency exchanges in China have also decided to shut down Yuan to crypto transactions post 30th October. Crypto to crypto transactions, however, has not yet been banned. In a twin statement released by them, the exchanges aim to gradually wind down Yuan operations by the end of October.
Regulation documents leaked
A document, allegedly issued by the Chinese government, has been leaked on Chinese social media. This document contains a set of guidelines for exchanges to meet certain regulations, as set up by the government. The Coin Telegraph translated this document and it says –
- Before 20 September 6 pm, 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 ensure that investors’ funds and virtual currencies are safe.
- 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.
- 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.
- Shareholders, controllers, executives, and core financial and technical staff of exchanges shall cooperate fully with authorities during the clearing while staying in Beijing.
- Exchanges shall report their developments daily to local authorities before the clearing is completed.
- Exchanges shall save all user trading and hold data, and send it to local authorities immediately in DVDs.
The document is signed: The office of the Leading Group of Beijing Internet Financial Risks Remediation, Sept. 15, 2017
Our take
The question on everyone’s mind right now is this – will Bitcoin’s rise be as astronomic, with overregulation in China? These announcements are in accordance with China’s anti-money laundering act and if the leak is to be believed, they’re really serious about it. The point which demands the exchanges to preserve and share user details with the government is particularly unwelcome.
With the big Chinese exchanges to stop trading in Yuan, it will be interesting to see if Chinese investors take other routes to invest and trade (A different currency may be). As for the shutdown exchanges, there are those who claim that these exchanges will open up again as overseas entities. The next couple of months will be crucial.
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.
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