China cracks down on cryptocurrency; exchanges to halt trading

 16 Sep 2017 - 0:00

China cracks down on cryptocurrency; exchanges to halt trading
A man walking past a display cabinet containing models of Bitcoins in Hong Kong on August 3 2016 shows AFP Anthony Wallace

Reuters

Shanghai: Chinese authorities have ordered Beijing-based cryptocurrency exchanges to cease trading and immediately notify users of their closure, signalling a widening crackdown by authorities on the industry to contain financial risks.
Exchanges were also told to stop allowing new user registrations as of yesterday, according to a government notice signed by the Beijing city group in charge of overseeing internet finance risks that was circulated online and verified by a government source to Reuters.
Platforms should also tell the government by Wednesday September 20 how they will allow users to make withdrawals in a risk-free manner and handle funds to ensure that investors’ interests are protected, according to the notice that was also reported by state newspaper Securities Times.
“All trading exchanges must by midnight of September 15 publish a notice to make clear when they will stop all cryptocurrency trading and announce a stop to new user registrations,” the government notice said.
China is cracking down on the cryptocurrency business to try to limit risks as consumers pile into a highly speculative market that has grown rapidly this year. Reuters and other media reported earlier this week that it planned to shut down the exchanges. Shanghai-based BTCChina, a major Chinese bitcoin exchange, said on Thursday it would stop all trading from September 30, citing tightening regulation, while smaller Chinese bitcoin exchanges ViaBTC, YoBTC and Yunbi on also announced similar closures.
Beijing-based platforms OkCoin and Huobi, which are among China’s biggest exchanges, did not immediately respond to a request for comment.
The bitcoin price was down 5 percent at $3,071 at 1036 GMT on US exchange Bitstamp. The bitcoin price index on trade website Coindesk slid below $3,000 for the first time in six weeks.
Bitcoin fell by more than 10 percent on Wednesday after a warning by JPMorgan Chief Executive Jamie Dimon that it “is a fraud” and will eventually “blow up”.
“Earlier yesterday,a senior executive at China’s state-backed internet finance body said that “stateless” digital tokens such as bitcoin posed risks as they could be used for illegal actions, and rules were needed to support the development of “legal” digital currencies.
Li Lihui, a senior official at the National Internet Finance Association of China and a former president of the Bank of China, also told a conference in Shanghai that global regulators should work together to supervise cryptocurrencies.
“Digital tokens like bitcoin, ethereum that are stateless, do not have sovereign endorsement, a qualified issuing body or a country’s trust, are not legal currencies and should not be spoken of as digital currencies,” he said.
“They can become a tool for illegal fund flows and investment deals.” He said there should be a distinction between digital currencies, which were being studied and developed by authorities such as the Chinese central bank, and digital tokens such as bitcoin.
Digital currencies developed by authorities could be used for good, with the right regulation, he said.