Chinese bitcoin exchanges await clarification on trading ban reports

SHANGHAI: China’s largest bitcoin exchanges said yesterday they were still awaiting clarification from the government following more media reports that Beijing was planning to ban trading of virtual currencies on domestic exchanges.

Spokeswomen for the OkCoin and Huobi platforms told Reuters they had no information to share following a report by Chinese financial publication Caixin that sent the price of bitcoin down 6.6% on Friday.

Caixin reported that China was planning to shut down local cryptocurrency exchanges. Yesterday, Bloomberg and The Wall Street Journal issued similar reports, saying that China was drafting a plan to ban commercial trading of all virtual currencies. Reuters was unable to confirm the reports.

BTC China, also one of China’s three largest exchanges, and China’s central bank did not immediately respond to Reuters’ requests for comment.

Bitcoin was trading lower by around 1.6% at US$4,160 (RM17,430) on the Bitstamp platform yesterday. On Sept 2, it hit a record high of nearly US$5,000.

China has boomed as a cryptocurrency trading venue in recent years as its domestic exchanges had previously allowed users to conduct trades for free, attracting investors and speculators who boosted demand and encouraging volumes.

However, regulators started taking a closer look at the industry in January this year and have since rolled out a series of rules for the industry including forcing exchanges to slap on trading fees and requiring them to strengthen oversight of customers’ identities.

The latest media reports follow China’s move last week to ban socalled “initial coin offerings,” or the practice of creating and selling digital currencies or tokens to investors in order to finance start-up projects.

Xue Hongyan, director of the Suning Financial Research Institute, the research arm of one of China’s largest fintech service providers, said in an article posted online that the latest reports suggested that the regulations were not aimed at the virtual currencies themselves, but rather trading of them.

“The reason is not difficult to understand. The virtual currency itself is not the problem, but the illegal behaviours that the virtual currencies enable are where the problems lie,” he said.