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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aloha_snakbar's picture

The Birth of Bitcon

Two friends, Bob and Satosh are sitting around after an evening of consuming copious amounts of some especially wicked dank. Bob says to Satosh:

Hey Satosh... I have a genius idea

Yeah, what is it?

You know that app you coded...the one that churns out the useless SHA algorithms?

Yeah?

LOL...lets sell them as digital currencies!

Dude...you are fucking wasted, here, have another bong

No, seriously. We get that graphic artist you know create a slick image of a 'gold' coin, and then we can further confuse the rubes by telling them their 'coins' have to be "mined", as if they were real, physical metals!

Dude... you are insane! What kind of moron would buy something like that?

Bob: Oh... I dont know. Remember that now worthless token you paid stupid money for on WoW?

They sit there and stare at each other for a moment, and then both burst out into torrents of tear stained laughter

They are still laughing today.

The rest is history

"On a long enough timeline, the price of all cryptos drops to zero"

Creepy_Azz_Crackaah's picture

One bitcion article per 30 minutes now. Is it obvious who got into the bitcoin speculation vehicle?

tmosley's picture

>There is no point in banning cryptocurrencies

Yeah, because they tried, and it didn't work. Governments can't stop the rise of crypto any more than they can stop the sun from rising in the morning.

Peanutz are even less effective.

BaBaBouy's picture

No point in Banning Sea-Shell trading Either ...

Creepy_Azz_Crackaah's picture

They didn't ban Beanie Babies. No reason to ban bitcoin.

Ramesees's picture

Every banker, trader, and analyst I know has some money in cryptocurrencies.  It's a spec bubble.  Could it continue?  Yes.  Could it pop?  Yes.  The market can remain irrational for longer than I can remain solvent.

Also - all you people that think it's a tulip bulb frenzy - you can place short trades on literally 20 exchanges.  Go put your money where your mouth is!

I'm not joking - you guys know how useless and worthless bitcoin and ethereum and litecoin and monero and dash are - GO SHORT THEM!  EASY MONEY FOR YOU!!

tmosley's picture

How many bankers, traders, and analysts that you know have some dollars? Are they in a speculative bubble?

Ramesees's picture

tmosley, I know you're a crypto fan, as am I, but I don't think that the US dollar is going to collapse anytime soon.  All central banks are doing the same thing the Fed is and all currency is relative.  

I hope this China thing isn't real, but even if it is the Chinese are going to find another way to get their wealth out of China and into crypto.  

YUNOSELL's picture

It seems pretty obvious then that China is jawboning to get people to liquidate their Bitcoin to crash it, if exchanges were not given notice.

MANvsMACHINE's picture

Perhaps the Chinese officials would like to join the party and bank some (Bit)coin.  Forcing the price lower to buy in at cheaper prices could be their motivation.

CJgipper's picture

II think that China is creating a dip to buy just like they've been doing with gold.  They own stakes in the miners.  They're loading up as everyone is crashing their own fiat currency.

Golden Phoenix's picture

Find an article that says the Chinese are banning ICOs written in Chinese. I dare you. The Chinese themselves don't know what we're talking about. Maybe the Russians did it.

tmosley's picture

If the dollar makes it to 2040 as a fully fiat currency, it will usurp the Yuan dynasty's "flying money" as the longest lasting fiat currency in history.

Bitcoin would have to last 731 more years to become the longest lasting (known) ledger-based currency.

Food for thought.

Ramesees's picture

I think the dollar will still be around in 2040.  Hopefully I will also be around to see it - 1985, so I'll be 55 then.  

 

Having said that, I'm hedging that bet with crypto, gold, real estate, and equity shares.  

 

Also - what's the other ledger-based currency you're referring to?

tmosley's picture

Tally sticks. Specifically the English split tally system. There are also some truly ancient (prehistorical) examples of tally sticks, and similar record keeping methods were used by the ancient Persians and the Inca.

https://en.wikipedia.org/wiki/Tally_stick

Mustafa Kemal's picture

 

"I don't think that the US dollar is going to collapse anytime soon"

After prepararing, China is creating a Yuan oil contract backed by gold. Together with Russia and the BRICS, they are buying gold and moving to eliminate the petrodollar middle man. That is coming

But there is more! Evidently, the IMF has plans along the lines of the demise of the petrodollar. I wonder if Lagarde moving IMF base to china is related?

http://www.zerohedge.com/news/2017-09-10/dear-president-trump-america-ru...

Ramesees's picture

What do you think that will mean, precisely?  That people won't buy US Treasurys?  

So what if China and Russia buy and sell oil via gold?  

Not using dollars probably saves like 1-3bps for an exchange fee which will be eaten up by the transport and protection costs of gold.  It will be inefficient.

 

But again, not using dollars to trade BBL of oil means what, exactly, for the US Dollar?  Do you think that oil trading is what gives the Dollar its status as the "reserve currency"?  Do you know what "reserve currency" means?  

Gah, you don't know enough to even argue with.  Go read Investopedia and learn what you can.

dasein211's picture

I dunno... 40 trillion in liabilities wears on a motherfucker. But China does this all the time to lower prices so the Plebs and the rich get a better in price.

dasein211's picture

I dunno... 40 trillion in liabilities wears on a motherfucker. But China does this all the time to lower prices so the Plebs and the rich get a better in price.

aurum4040's picture

I agree with your shorting statement no doubt, they won't out their money where there mouth is because they know next to nothing about cryptos other then being jealous that they didn't buy in years ago. 

Yes every trader analyst etc. has some crypto or most...but the masses still do not have a clue on this. Some have heard of it but most wouldn't even know where to begin let alone understand the technology behind it. I get the bubble comparisons because of price rununp. But these are finite instruments and or very close - theres no printer, there's no paper crypto bullshit shorting billions of cryptos that don't even exist, and some Cryptos have more potential then any other company that's ever existed. Far more potential. Such as ETH. So saying we are in a bubble now, at this moment in time, in this moment in the crypto saga, it's  a narrow minded world is flat mentality. $150 billion is a drop in the bucket - Forex trade is 4 trillion plus per DAY. 

LostandFound's picture

If people were able to put it in context, it's probably the only market not in a bubble. It will hit 200b this year and double next year. 

Manthong's picture

 

Well, the good news is that electrons, bit and bytes will still exist after the great wall of china erodes into a gulch.

… but real yuan might be better.

..and hi faggot troll..................................................

I know who you are.... you are a skinny, unshaven, unkempt maggot who likes to think his up/down votes matter to the world.

 

aloha_snakbar's picture

Cryptos will never be a currency, Uncle Scam/IRS have already said as much. As another poster pointed out, the current price alone will be enough to keep most people out of it. If it is true that most households dont have enough money to cover a temporary emergency, then it is hard imagining that enough will buy Bitcon so it can achieve escape velocity.

But considerations like common sense, gravity,reality, etc never seem to intrude into the consciousness of those living in quantum, parallel dimensions.

Party on, Wayne...

VD's picture

and all those resident crypt0-muppets that have 1/10th of a Tulipcoin pretending to be crypt0....muppetz...

Ramesees's picture

No, to achieve escape velocity, somewhat ironically, we will need institutional money coming into the space.  Given the hype - crypto articles are the most read on Bloomberg and CNBC.com EVERY DAY - there will be crypto hedge funds soon.  This will cause regulation, which will enable other institutional money to flow into the space.  

Institutional money is escape velocity and gets us way, way past the moon.  We're talking Voyager distance.  Outside the heliosphere.

It may not happen at all - it's certainly the Wild West and risky as *shit*.  It absolutely could go to $0.  But you can't deny that the underlying technology is extremely interesting.

Mustafa Kemal's picture

"But you can't deny that the underlying technology is extremely interesting."

More than interesting. Life changing IMO. Can you imagine: democratic elections? 

tmosley's picture

>Uncle Scam/IRS have already said as much

In your desperation to deny the rise of crypto, you now claim that the king, whom you previously HATED, commands the tides.

>then it is hard imagining that enough will buy Bitcon

Bitcoin doesn't have gold's failing of vastly increasing in premium for smaller denominations. 0.0000001 BTC can be had for the same price as 100 BTC. 

Also, BTC is still TINY. Only 3x the size of the silver market. It (and/or some better crypto) will surpass the gold market in size, then M1. And all you can do is cry about it.

tion's picture

You could go buy twenty bucks of bitcoin if you wanted to. Highly divisible. After 10k it will probably be priced in mBTC. They would need to codify new shackles to even class crypto as a "currency" in US, why t f would I want them to do that?

HungryPorkChop's picture

Plenty of other crypto's like LiteCoin that are only $65 which are cheaper to use plus can handle significantly more transactions per second than Bitcoin.  Sort of like Bitcoin is the $100 bill and Litecoin is $1, quarter, dime and nickel.  Making a $50,000 transaction then use Bitcoin.  Buying a $5 latte then use Litecoin. 

tmosley's picture

Or use IOTA, which has no transaction fees.

Though either option is better for merchants, since they don't have to pay the fees for accepting credit cards.

RedDwarf's picture

Yes, pricing in mBTC is how it will go.  I know people right now who want to get into bitcoin, but stay away because in their head it is too expensive.  They think in terms of 1 BTC as 1 currency unit, not 1000 mBTC or 1,000,000 uBTC for example.  It's just psychology.

tmosley's picture

A Satoshi is about 1/300th of a cent.

Seems pretty darn cheap to me.

Should BTC take over the role of money in our system, a satoshi would have a purchasing power of about 10 cents today.

King of Ruperts Land's picture

"Should BTC take over the role of money in our system, a satoshi would have a purchasing power of about 10 cents today" - which is not too far off the real value of a copper penny in the old hard money silver dollar systems that goes back through history.

It was probably designed that way.

Sabibaby's picture

"Cryptos will never be a currency"

You do realize government officials hold cryptos to right?

Uncle Sam/IRS want you to pay taxes on crypto earnings. They themselve legitimized it by doing that.

 

It doesn't hurt to diversify your portfolio with cryptocurrencies just like it doesn't hurt to own pm's and bullets and beans. 

tion's picture

'Authorities don't have plans to stop otc transactions' = Authorities don't have the authority or capability to stop otc transactions. 

Dance clowns, dance. 

ZorroHedge's picture

Why wouldn't he ? Is it better to stay in value losing fiat or put your savings in an overvalued stock market ? 

Justin Case's picture

“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.

Outrageous I say! How could anyone trust  a taxi driver for investment advice? The barber knows best, I only trust him.

Arnold's picture

Although the Armored Personnel Carriers idling out front of the old Brick and Mortar, serves unofficial notice.

Raffie's picture

So go find another site to make as your main if you don't like it here.

ZorroHedge's picture

The only thing that will drop to zero is your credibility. Don't talk about what you don't understand. I could have some understandings for your remarks 2-5 years ago when Bitcoin was new and not accepted anywhere. But now, Bitcoin is regulated and accepted as legal payment in many countries already. Only a clueless idiot would now make the claim that Bitcoin will drop to zero. 

aloha_snakbar's picture

Moron, I have forgotten more about technology than you are likely to ever know. Cryptos are a fad, engaged in by a *tiny* rabid fringe of adherents. The current price of Bitcon alone will be enough to keep most people from investing in it.

And price aside, who would want to "invest" in someting that goes down 500 - 1000% every time a Chinese guy somewhere farts? There is no price stability in Bitcon, an essential quality of currency.

tmosley's picture

>Cryptos are a fad

Krugman, is that you?

RedDwarf's picture

"who would want to "invest" in someting that goes down 500 - 1000% every time a Chinese guy somewhere farts?"

Fact is anyone who has invested in bitcoin and held for a while has made massive gains.  The volatility has been high, but this has been a massive bull market.  Trying to claim it has been crashing down constantly is a flat out lie.

ZorroHedge's picture

So you really think an idiot like you that knows nothing about Bitcoin knows more about technology than an engineer with a PhD ? The more you talk, the more you look like a fool. People will not buy expensive Bitcoin but they will buy expensive gold, right ? These people like you were saying Bitcoin to be expensive when it was at 1000 $. Now Bitcoin is more than 4000 $. At the same time these people were hoarding gold like crazy ... at 1900 $, at 1700 $, at 1500 $, at 1300 $ for years. So 1000 $ Bitcoin was too expensive but 2000 $ gold was cheap  ??? I think you people are crazy in the head.

2000 $ gold is way more expensive than 4000 $ Bitcoin. Look at the marketcap. The high price of Bitcoin is the consequence of its immense scarcity. That is why Bitcoin is now still extremely cheap ... way more cheap than gold. And it is superior money to gold. No offense against gold because I also invest in it. As I said investing in both doesn't have to be mutually exclusive. Sure, it has many drops of 30-50 %. But at the same time it has long term gains of 1000 %. Do you even realize that Bitcoin was priced 400 $ last year and now went up 10 x ? Who cares about these 10 50 % price drops that happened if 1 year later it is up 1000 % ? China can fart as much as it wants, price went still up 1000 %.

OpenThePodBayDoorHAL's picture

Bitcoin is a thing that goes up. Money? LOL. Try spending one sometime. Scales to 20 transactions per second, then unbelieveable software gyrations to try and do more. "Off-ledger services", LOL we already have that, it's called BANKING. Security? The company that knows how is Xapo and they store their BTC on servers that have never connected to the internet 60 feet underground. LOL yeah that will work as money. And why would you ever spend one in the first place? Hyper-deflationary.

So it's a thing that goes up. But "the great new internet money" it is not.

I woke up's picture

Waiting for the "only drug dealers and terrorists use Bitcoin" from gov's

 

tmosley's picture

Too late. Powerful people are interested and are buying now. Will become increasingly difficult for the government to ban them outright (as if that were ever possible).

What people fail to understand is that our governments and the central banks are NOT controlled by people with wealth that towers over them. No, they are controlled by people with far LESS wealth than the sum total of the citizenry. They just have enough money that they can buy them off, and maybe pay for an assassin or two here and there. When those kinds of people are getting into crypto, there is no stopping it.

OpenThePodBayDoorHAL's picture

LOL. It's already illegal to have certain strings of numbers on your computer (child porn JPEGs etc). Banning crypto keys will be a piece of cake. Yes mixers and dark web sites will flourish with them. But if you think governments and banks are going to give up without a fight you are sorely mistaken.