Bitcoin Tumbles after A Chinese Exchange halts Trading

Share

When the Chinese government announced a ban on initial coin offerings last week, it looked like an attempt to rein in the speculative excesses of the cryptocurrency economy.

According to Chinese financial news outlet Caixin, BTCC offices were visited yesterday by officials representing the Leading Group and it is likely that other exchanges will have had similar contact.

"It may also cause bitcoins to flow out of the country while major (cryptocurrency) exchanges will also seek opportunities to go overseas", Deng said.

It's unclear whether China is effectively banning cryptocurrencies or if it wants to use a licensing system to gain control of the system. However, the idea of a state-run digital currency is under consideration.

Digital currencies are being developed by authorities such as the Chinese central bank, while tokens were stateless and did not have sovereign support.

China's central bank has yet to respond to questions about bitcoin's future in the country but earlier warned it was traded without regulatory oversight and might be linked to fraud.

BTC China said on its website it will "stop all trading business" on September 30.

The price of Bitcoin and almost all other cryptocurrencies has dropped sharply in the last couple of days.

What Does This Mean for Cryptocurrencies?

"Chinese volumes account for less than 10 percent of global volume - they are no big deal", said Charles Hayter, founder of cryptocurrency analysis website Cryptocompare.

Not everyone seems to be in favor of shutting down Bitcoin trade in China.

The announcement of BTC China left investors scrambling to get their money out before it's too late, which kicked off a rapid plummet of the value of Bitcoin. Markets like Japan, Korea and the USA have emerged to account for the lion's share of global trading volumes, so the impact of this China ban is not as severe as it initially may seem.

Beijing-based Huobi, one of the country's top-three Bitcoin trading platforms, said it hadn't received any orders about stopping trading but will "obey government laws and try its best to protect clients' assets". The Securities and Exchange Commission, though, already expressed concern over illegal stock offerings. The largest currency - Bitcoin, worth almost $49bn - fell by 19 per cent.

Share