PBoC Addresses the Bitcoin Problem
BTC China subjected all bitcoin withdrawals to a 72-hour review, while Huobi and OKCoin suspended them completely, the three venues said in separate statements on Thursday. They all said the measures were in response to central bank requirements. Conversion to and from the yuan is not affected and the curbs will be dropped after updates to compliance systems, the exchanges said.
You can trade Bitcoin freely in China as long as you enter and exit in yuan. If you want to enter in yuan and exit in Bitcoin, taking your Bitcoin off the exchange with the potential to send it anywhere in the world, you can’t anymore.
The People’s Bank of China told nine bitcoin venues at a meeting in Beijing on Wednesday that it will close exchanges that violate rules on foreign exchange management, money laundering, and payment and settlement. Chinese authorities are scrutinizing the cryptocurrency amid concerns it’s being used to spirit money out of the country, undermining official efforts to clamp down on capital outflows and prop up the yuan. Demand from investors in Asia’s largest economy, home to most of the world’s bitcoin trades, has fueled a 160 percent rally versus the dollar over the past year.
…“The Chinese government is worried about capital flight,” said Arthur Hayes, a former market maker at Citigroup Inc. who now runs BitMEX, a bitcoin derivatives venue in Hong Kong. “Bitcoin is seen as another way to move money out of China, even though most people trade it for onshore capital appreciation and as another asset in their portfolio.”
It’s not clear if the PBoC is concerned about outflows through Bitcoin, or concerned about potential outflows if Bitcoin prices start climbing towards $10,000. More likely, the central bank treats the almost totally Chinese dominated Bitcoin market the way the Federal Reserve treated gold in the past: a very public referendum on the currency.