Confusion Grows Over China "Bitcoin Exchange Ban": 3 Largest Exchanges Have Not Received Any Official Notice

Tyler Durden's picture

Bitcoin continues to hover near last week's post-ICO-ban lows having given up the rebound gains on headlines proclaiming China plans to shut local Bitcoin exchanges - a problem since the country accounts for 23% of global trading. However, the China's 3 biggest exchanges have still not received anything official with regard the ban and Russia's finance minister has outspokenly proclaimed "there's not point in banning" crptocurrencies.

Confusion remains the biggest factor weighing on cryptocurrencies for now...

As we detailed previously, China reportedly plans to ban trading of bitcoin and other virtual currencies on domestic exchanges, dealing another blow to the $150 billion cryptocurrency market after the country outlawed initial coin offerings last week.

Bloomberg reports the ban will only apply to trading of cryptocurrencies on exchanges, according to people familiar with the matter, who asked not to be named because the information is private. Authorities don’t have plans to stop over-the-counter transactions, the people said. China’s central bank said it couldn’t immediately comment.

While Beijing’s motivation for the exchange ban is unclear, it comes amid a broad clampdown on financial risk in the run-up to a key Communist Party leadership reshuffle next month.

“There has been a general tightening of the screw on regulating financial and monetary conditions,” said Mark McFarland, chief economist at Union Bancaire Privee SA HK in Hong Kong. “All of these things suggest a longer term process of tightening scrutiny of activities that aren’t in the normal sort of monetary realm.”

However, as Bloomberg reports, OKCoin, BTC China and Huobi, the country’s three biggest bitcoin exchanges, said on Monday that they hadn’t received any regulatory notices concerning bans on cryptocurrency trading.

All three venues reported transactions on Monday, with bitcoin rising 7.6 percent on OKCoin as of 5:09 p.m. local time.

The exchange ban is unlikely to have a major impact on the prices of cryptocurrencies globally because venues outside China will continue trading, according to FBG Capital’s Zhou. The country’s role in the bitcoin market had already started shrinking in recent months as authorities tightened regulation. At one point, exchanges in China accounted for more than 90 percent of the world’s bitcoin transactions.

“Whenever you start to hear about Hong Kong taxi drivers becoming millionaires from buying bitcoin, you start to think this is not necessarily driven by fundamentals,” he said.

 

“So you will get quite substantial pullbacks at some point.”

Furthermore, Chinese officials are even talking back the ICO ban as "temporary." As CoinTelegraph reports, during an interview with state-owned national television network CCTV-13, Hu Bing, a researcher at the Institute of Finance and Banking, a Chinese government-supported academic research organization, claimed that the government’s ban on initial coin offerings (ICOs) is only temporary.

The Chinese Academy of Social Sciences and its Institute of Finance and Banking are affiliated with the State Council of the People's Republic of China, the chief administrative authority of the People’s Republic of China. The Chinese Institute of Finance and its researchers are considered to be a government institution and government officials.

 

In his interview with CCTV translated by Box Mining, Bing explained that the suspension on ICOsand the government’s declaration of ICOs as an illegal fundraising method are only temporary, until local financial regulators introduce necessary regulatory frameworks and policies for both ICO investors and projects.

 

More importantly, Bing emphasized that the Chinese cryptocurrency community must understand that the government has not “forbidden” ICOs but instead “paused” them, demonstrating the government’s intention to resume ICOs in the near future. Bing also noted that the Chinese government and its financial regulators are currently considering the potential of allowing ICOs to raise money in a controlled environment, through a licensing program.

 

Essentially, if the government decides to legalize and regulate the ICO market, its licensing program would structure similarly to the BitLicense program of New York State Department of Financial Services (NYSDF), which requires companies to obtain a license from the state in order to operate and serve people of New York.

Additionally, CoinDesk reports that Russian Finance Minister Anton Siluanov said his department will regulate the use of cryptocurrencies in the country by the end of 2017.

Siluanov offered insight into the government's plans to oversee Russia's domestic cryptocurrency market during an appearance at the Moscow Financial Forum last Friday. Echoing previous statements by members of the Russian government, Siluanov said banning cryptocurrencies does not make sense and that the ministry will likely treat digital monies similarly to securities, Reuters reports.

According to Wordnews, Siluanov said:

"The state certainly understands that cryptocurrencies are a reality, there is no point in prohibiting them. It is possible to regulate them, so the Finance Ministry will draw up a bill by the end of the year."

His comments add to those coming from other quarters of the Russian government, offering yet another window into what could be a completed policy move by the end of the year.

Finally, as institutional investors pile into the cryptocurrency space, CoinDesk reports that they may be altering the underlying dynamics of the market itself.

By virtue of buying in, institutional investors are pushing prices up, and that's likely to continue as these investors place bets in a way that furthers an already bullish cycle many have labeled a bubble. Bearing mountains of cash and a mindset unlike retail investors, crypto hedge funds are being directed to invest all (or most) of their cash. And without sophisticated mechanisms for shorting cryptocurrencies, retail investors have limited options and excessive risk in betting on price decreases. Matthew Goetz, co-founder of new cryptocurrency fund BlockTower Capital, affirmed the impact of this buying pressure is likely to continue to mean the cryptocurrency market doesn't behave like those of more mature assets. Goetz told CoinDesk:

"As more capital comes in the space, from a market structure standpoint, whether it's funds or some other structure, that will likely be a bullish catalyst for prices."

And Goetz, who worked for more than a decade at Goldman Sachs, has no doubt the more capital will come.

"I think the space is going to continue to get more competitive, because people are seeing the opportunity set," he said.

The bullish comments were echoed by Thomas Kineshanko, co-founder of Protos Cryptocurrency Asset Management, who believes the mechanisms at play are working to push cryptocurrency prices skyward even more.

"Given the total market cap of cryptocurrency of say $150 billion on any given day, and then you add say a billion dollars, prices are going to rise.  So yes, the money coming in to the market is going to raise prices – as long as there's not any major sell-off," Kineshanko told CoinDesk.

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0valueleft's picture

Looks to me as if there is a new sector in the accounting industry. These are the things I worry about for my long position. I took my principle out a while ago, but would still like to realize the cream at higher levels. There is a nice house for sale in my area the sellers will take 75% of the homes asking price in BTC. Their realtor is concerned about her commission, that was a funny conversation. While my accountant has told me he won't touch it. These issue aren't glitches, but they are hurdles. Forces you to be 100% active in the process, which I suppose is a positive. Therre is always JMBullion.

tmosley's picture

There are accountants out there that specialize in crypto. It's really not that hard to handle thanks to the blockchain recording dates and times of transactions. You just give them your wallet addresses and they calculate how much you owe. Every transaction is a taxable event in the US, which is why I am hodling most of mine.

Mustafa Kemal's picture

"There is a nice house for sale in my area the sellers will take 75% of the homes asking price in BTC."

Is this true? I just read an article here where they said to watch for signs like this. This means they are not selling to turn the BTC to cash, but to obtain BTC. The article asserts that when this starts happening, it will head up fast.

0valueleft's picture

It's becoming less uncommon, not sure about how many actual closings there are, that's the important stat.

LostandFound's picture

Well people should also research SALT. At somepoint people will be able to use tokens as collateral to obtain credit. 

Golden Phoenix's picture

Buyers can get 5-50% off items from Amazon by using Purse.io but some people dislike saving money for some reason. The sellers are willing to sell at such discounts to get bitcoin. https://www.youtube.com/watch?v=waF3E9QIIGc

Cutter's picture

As I'm one of the commenters who has been touting the likelihood of a ban or regulation, this would make it appear governments are moving to regulate versus ban.  The days of government being hands off are coming to an end.  Question is can private cryptos survive regulation?  

Given capital flight is one of their main concerns, undoubtedly, the regulations will include stripping anonymity from transactions, accounting of transactions, a tax regime, and levers that the government can pull if they see capital flight they don't want.  

"Treat digital monies similar to securities."  Think about the highly regulated environment that exist around securities. Only licensed brokers can deal in them. Brokerages have strict recording and reporting requirements, so if you make a bitcoin transaction, does the exchange have to provide a year end 1099 to the IRS? Transactions outside of the regulated exchanges will be prohibited.  Do so and you are subject to being jailed.  Governments will have a stranglehold on the exchanges, just like they do brokerages.  And if you use private cryptos to buy a beer in a bar, did the bar just become an exchange, subjecting themselves to all of the onerous regulations?

Question is, if private cryptos are heavily regulated, will they have any advantage over fiat or just good old credit cards?  

And since many of private cryptos' proponents are attracted by the libertarian idea of creating a financial system independent of government intervention, will you see the creation of yet another crypto system--perhaps on the dark web--that rivals the regulated private crypto system, in a never ending digital battle for financial sovereignty?

The answers to these questions will determine the value of private cryptos.  

As for me, I think regulation will cause people to look and say, where is the beef?  They don't add any value. They don't provide any convenience.  This doesn't mean they won't keep going up for a while, speculative booms don't take fundamentals into account. 

grasha87's picture

I have devised a free market currency/scrip to help alleviate recesions and unemployment that the Federal Reserve System has caused:

https://bunky1787.wordpress.com/2017/09/06/the-wallark-neo-scrip/

disagreeableness's picture

So, no Ban to see here. ZH used to be contradictory from post to post, now it happens many times in a single article. 

BitchesBetterRecognize's picture

..... But BTC cult followers keep saying it is "decentralized" & "immune to any Government interference".....   

disagreeableness's picture

Read "manipulation", then it becomes more clear. 

tmosley's picture

We didn't say they couldn't affect the price. We said they couldn't stop the rise of crypto. And they can't. Worst case scenario, they come down super hard, and fully anonymous cryptos are developed and a huge portion of the economy goes dark. With self-executing contracts, that is a good thing. No outside interference AND no violence as a result of having to keep transactions quiet.

GoyimUprising's picture

I agree.  We must demand our right to contract without outside interference.

Panic Mode's picture

As long as we are printing, bitcoin is going to the moon. Only muppet wants to pay capital gain tax.

jellen's picture

I didnt own/understand gold until I did.

I'm still having trouble getting on the bitcoin bandwagon all the while watching its volitile rise. 

Just one more question? What happens to my cryptos if my ship goes down???

Will some treasure hunter get rich when he finds my Shtick???

 

Exponere Mendaces's picture

ZH got suckered by Chinese "news" just like their faked GDP numbers.

I am Jack's complete lack of surprise.

Thanks for the update ZH, basically confirming what I and other Bitcoin veterans knew within the first hour. Way to be behind the curve on crypto, as usual.

We now join all the fossils and (g)oldfags that cut-and-paste their replies into every Bitcoin thread.

What a bunch of lazy fucks.

 

Jballsquared's picture

Memo to zeroes

China has banned Bitcoin twice a year since 2010.

If you've ever had the privilege of dining with a CFTC regulator and learning how much they do not grok about markets and trading, divide that by 300, you have their Chinese counterpart.

You've been duped again. But that's alright. The top will be in when you assclowns mortgage your trailer to buy in. Until that happens the smarter of the crowd will buy the fucking dips.

GoyimUprising's picture

There is no confusion.  It is FAKE NEWS.  BTFD!

Sledge750's picture

Personally, I accept Steem...

 

Small enough to grow, easy to convert...