In China, the hammer has fallen — again

In China, the hammer has fallen — again

[UPDATED UPDATE April 25, 2014. Well, the latest news from China reaffirms my original April 10 post. The hammer has indeed fallen -- maybe. With Chinese authorities, it's hard to tell. The Caixin news site has reported that banks and third-party payments processors got a serious talking to by government banking officials, who told them in no uncertain terms to cut all channels allowing citizens to buy Bitcoin with renminbi. Fiat withdrawals will also be shut down, effectively cutting exchanges off from Chinese traders. Bitcoin dollar values have taken yet another tumble on the news.]

[UPDATE April 20, 2014. In hindsight, my breathless tone in this report from April 10 now seems unwarranted. Some banks have closed some accounts belonging to some exchanges, but the exchanges mentioned below are still chugging along. Prices have recovered somewhat as a result.

Also, the chart I embedded April 10 clearly showed the prices tanking. But, I didn’t realize it was a live URl from Bitcoincharts, and it would update automatically. So, the sharp drop indicated in the text is now gone. Since I didn’t capture the April 10 trend, I have deleted the link to the chart, to avoid confusion.]

As many observers had feared, the rumors that China would cut off Bitcoin exchanges’ bank accounts have turned out to be true.

Today, Huobi and BTC Trade both announced that their banks were closing the exchanges’ bank accounts, under orders from the central bank, the People’s Bank of China (PBOC).

BTC China, where I have an account, told me they have not heard anything from their bank, however. But we still have five days to go before the PBOC’s deadline for banks to close Bitcoin-related accounts comes.

Bitcoin and Litecoin prices against fiat have tanked since the two exchanges posted the news, as you can see in this chart from bitcoincharts.com. Chart deleted — see above.

Late last month, the Chinese news site, caixin.com, reported that the PBOC had instructed all Chinese banks and third party payment processors to stop dealing with Bitcoin-related businesses, and to close their bank accounts by April 15. The PBOC neither confirmed nor denied the report. and exchange operators insisted they had heard nothing about it. But Bitcoin values tumbled as Chinese holders sold off their assets (or so I assume). And, while insisting everything was fine, we’re just fine now … how are you? the exchanges quietly changed their deposit methods. BTC China’s direct deposit voucher system was cut off, for example, while bank account transfers were still (for now) allowed.

So, where does this leave me and other Bitcoin users in the Middle Kingdom? As I mentioned in my last report, the Ripple network still seems to be unregulated. I can still buy XRP vouchers online with renminbi and exchange XRP elsewhere for Bitcoin. It’s not as convenient as trading directly at BTC China, but at least I’m not cut off entirely. Whether other users in China will take advantage of the Ripple-go-round, I can’t say.

As for Bitcoin itself, it will recover. While China was one of the biggest participants in Bitcoin trading, it’s not the end of ¬†world if China is largely out of the picture. Besides, Chinese Bitcoin fans may yet find other ways to stay in the game.

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About the author

I've been a teacher for 30 years, most recently in China. Before I became a teacher, I was a newspaper reporter. Somehow, I still haven't gotten over the writing bug.

View all articles by John Wheaton

3 comments

  1. Justin Hawley

    Hey John! Some people on reddit are wondering if that image is the correct one? It doesn’t look like it is “tanking”.
    Justin.


      1. Post author
        John Wheaton

        Well, it isn’t the image I originally posted. I embedded a live URL from bitcoincharts, so it must be updating automatically. To lessen confusion, I’ll remove the chart URL.

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