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Many issues face the cryptocurrency market in China, and it may only worsen. As Bitcoin exchanges and trading platforms in the region struggle to comply with the central bank’s policies, there are signs of more roadblocks appearing in the near future.
It all started with the People’s Bank of China’s sudden inspection of Bitcoin platforms to check unfair practices. The move, which was first hailed as the government’s initiative to protect investors’ interests soon turned into the government’s way of tightening its control over the country’s cryptocurrency market.
China has been one of the biggest Bitcoin markets with huge trade volumes, enough to influence the global prices. Also, the country’s mining community has a considerable bearing on the Bitcoin network itself. The crackdown has resulted in drastic changes to the functioning of the cryptocurrency market in the country. Exchanges and trading platforms were forced to stop offering leveraged trading and borrowing services, leading to falling trade volumes.
Now, with new compliance requirements, traders are left with no way to withdraw their cryptocurrency balances from the Bitcoin platforms. The hopes of China recognizing Bitcoin as a currency fell after the recent message by the Chairman of PBOC’s Operations Office Zhou Xuedong. Xuedong indicated that the regulatory bodies in the country are planning to introduce a series of regulations that could further hamper the use of Bitcoin and other cryptocurrencies in the region.
According to Xuedong, the Bitcoin platforms operating in the country have to receive clearance and approvals from not just the PBOC but also the securities regulator and State Council to run full-fledged exchange services. Unless these approvals are received (which is highly unlikely), they will just be online platforms. However, it is not clear how that will legally affect the operations of the existing platforms in the country.
The recent development suggests that the limitations imposed by China’s cryptocurrency platforms on their users are likely to remain for much longer than earlier anticipation. Few of the leading crypto-platforms have already extended their Bitcoin withdrawal limitations.
Bitcoin, on the other hand, seems to be unperturbed by these developments as the price continues to hold steady, except for some volatility that fell within limits. Neither the Chinese scenario nor the rejection of Bitcoin ETF by the US SEC seems to have had the expected impact on the cryptocurrency’s price.
Ref: DailyFX | Image: Shutterstock