China to ban Bitcoin and other Cryptocurrency exchanges

Randall Padilla
September 12, 2017

If you were wondering why the price of Bitcoin dropped faster than Ronaldo when he gets looked at by opposing defenders, turn your attention towards China. The country accounts for about 23 percent of bitcoin trades and is also home to numerous world's biggest bitcoin miners, who confirm transactions in the digital currency. The move follows a decision by regulators last week to ban initial coin offerings (ICO). China's central bank said it couldn't immediately comment.

A notice from the Banking Regulatory Committee led by the People's Bank of China announced on September 4 an immediate ban on ICOs.

Although bitcoin is being traded at around $4,000 in China, almost $200 lower than the United States market, Chinese exchanges have demonstrated low trading rates for the bitcoin-to-Chinese yuan pair throughout 2017.

China's looming ban on virtual currency trading won't affect the global market as exchanges based in other countries will continue to operate. Bitcoin has jumped about 600 percent in dollar terms over the past year, part of a broad surge in virtual currencies that has fueled concerns of a bubble.

"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. Unfortunately for Bitcoin, the Chinese government is not a fan of cryptocurrencies, which are mostly traded by Chinese citizens who are hedging against falls in the yuan.

There are conflicting information regarding China's alleged order for virtual currency exchanges to shut down, as several Chinese exchanges such as Huobi and Okcoin have said they haven't any orders from the government.

China was once the world's largest Bitcoin marketplace, accounting for almost 90% of global trading.

Bitcoin was trading lower by around 1.3 percent at $4,170 on the Bitstamp platform on Monday.

China is in the midst of a crackdown on capital outflows, which experts see as stemming from a cooling economy and fears that the central government is losing control of its monetary authority.

Other reports by AllAboutTopnews

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