China exchange will stop trading bitcoin
BEIJING — A major Chinese exchange specializing in the trading of bitcoin announced Thursday that it would stop trading by the end of the month, amid a broader crackdown against virtual currencies by authorities in Beijing.
The announcement by BTC China, the country’s first and largest digital currency exchange, came days after the Chinese authorities banned fundraising for new digital currencies, and amid worries that regulators would tighten rules surrounding currencies like bitcoin.
The exchange’s decision is the first of its kind in China, and it raises the specter of other exchanges shutting down bitcoin trading in the future.
China has sought to walk a tightrope when it comes to bitcoin and similar virtual currencies. Whereas the currencies provide the country with a chance to develop new and emerging technologies, officials also worry that they would allow Chinese consumers to get around tough restrictions on how much money they can send overseas and allow them to be used to launder money.
Still, the impending closing of BTC China’s online currency trading operations is a blow to the country’s aspirations to lead the way in the sector. Some two-thirds of all bitcoin issued daily is “mined” in China, and an array of other companies benefit from such efforts, including equipment suppliers and construction firms that build enormous bitcoin farms.
“It’s a sad day for the bitcoin community here in China,” said Wei-Tek Tsai, director of the Digital Society and Blockchain Laboratory at Beijing’s Beihang University.
In a statement published on WeChat, BTC China said it would stop all trading Sept. 30. It said the move was in response to a decision this month by Chinese regulators to ban initial coin offerings, in which new digital currencies seek to raise funds.
The price of bitcoin dropped more than 10 percent Thursday, to around $3,500, in the hours after the announcement.
Bitcoin is increasingly in the spotlight around the world. Its proponents — a group that includes tech enthusiasts, civil libertarians, hackers and criminals — cheer the fact that it can be sent across borders anonymously and is not regulated by a central authority like a typical currency.
China has emerged as the leading force in bitcoin trading in recent years. But as the virtual currency’s profile has risen in the country, Chinese regulators have increasingly sought to control how it is traded and used. When they stepped up their oversight of bitcoin trading this year, it led to a rapid and substantial drop in trading volumes.
“Because it is traded anonymously and peer to peer, bitcoin makes it easy for money laundering and tax evasion,” said Sheng Songcheng, an adviser to the People’s Bank of China, the country’s central bank.
Official Chinese news media have cited officials as saying they want to close bitcoin exchanges — a move that precipitated Thursday’s decision by BTC China — though they have not set a time frame.
China Business Network, a financial and business news portal, said Thursday that the authorities in Shanghai, where BTC China is registered, would close all bitcoin exchanges within their jurisdiction by the end of the month; and the report piled on further uncertainty.
Though the moves by the Chinese authorities this month have resulted in declines in the value of bitcoin, some argue that they will allow for a more even geographic distribution in the online currency’s trading and mining.
“The overall share of Chinese exchanges has been diminishing steadily,” said Thomas Glucksmann, marketing manager for the Hong Kongbased bitcoin exchange Gatecoin.
Glucksmann said much of the bitcoin community had been concerned about the increased level of scrutiny in China and had been moving their assets out of the country.
“People will realize that China is out of the picture for the moment,” he said.