Game Over, Bitcoin Exchanges
Caixin reports today that domestic exchanges represented by OkCoin that provide trading services between cryptocurrencies and CNY will be banned for a certain period of time. Upcoming regulations are not imposed to hurt cryptocurrencies themselves and the OTC markets.
Regulatory authorities decide to ban all domestic cryptocurrency exchanges, including OKCoin, Huobi and BTCChina that trade cryptocurrencies with CNY. Local agencies have been informed to carry out the decision.
Service provider Guojiaowang today announces that under the guideline of the financial work conference held in Beijing on Sept 8 and Sept 5, they decide to stop all cryptocurrency trade starting from today.
On Sept 4th, the PBOC officially defines ICOs as “illegal fundraising”. Followed the announcement, 60 ICO platforms are under examination and token services are shut down.
“Exchanges involving trades between CNY and cryptocurrencies shall not operate in China. By doing so, there won’t be more questions concerning whether tokens and cryptocurrencies can trade with CNY.”
A regulator points out that the growth of blockchain technology will not be damaged if bitcoin exchanges are banned.
The agency says that the decision is made because trades between CNY and cryptocurrencies involve risks concerning the market, finance and the society.
Regulatory agencies believe that investment on cryptocurrencies serves as a hotbed for illegal fundraising. Simple investors can’t even tell the difference between bitcoin and other valueless tokens.
“The bull market of bitcoin has led to illegal activities. The craze of ICOs by its nature is the craze of bitcoin and bitcoin exchanges, which has been used as a tool for ponzi’s schemes and scams.”
The authority reveals that when they examined some of the exchanges in China in the first half of 2017, they found that exchanges tend to make false transaction volumes and did no jobs to fight money laundering.
“Some exchanges start futures and leverage to make them look more active. And they divide bitcoin into small pieces to attract more users. This is like issuing securities illegally.”
The department emphasizes that investors should realize that bitcoin, blockchain and bitcoin exchanges are three different concepts.
“Bitcoin is not equivalent of blockchain and bitcoin exchanges; bitcoin exchanges is no blockchain.”
In addition, bitcoin exchanges have done nothing good for the blockchain technology. Instead, they have been served as a hotbed for scams, illegal fundraising and pyramid selling. As such, the watchdog decides to shut down bitcoin exchanges.
“We aims to control financial risks. Have bitcoin exchanges contributed to real economy? I don’t think so.”
Will risks be lowered if a regulatory sandbox be set up?
“It will only decrease market risks, but not financial risks and social risks.”
After reading recent news about regulations, I realize that the government seems very positive about the blockchain technology, but they are concerned about potential risks caused by the hype of the bitcoin market . I assume all the news are released partly to scare away newbies. The real question is will all exchange be shut down in China? Even the big three?
BTCChina delisted ICO tokens earlier this month, OkCoin and Huobi so far haven’t done any ICO projects. In addition, CEO of OkCoin Star Xu is a member of National Committee of experts on the Internet financial security technology.
Okcoin and Huobi are members of the technical association of the national committee. So I feel if any exchange will survive, it might be Ok and Huobi. And if these two are shut down, then……it’s all for the sake of public security.