PBOC Happy to Kill Bitcoin Trading, RMB-BTC Trading Now Less Than 1 Percent of Global Total

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The People’s Bank of China (PBOC) announced on Friday, July 6, that Bitcoin trading in renminbi (RMB) has decreased to less than one percent of the world total. The trading figure reached its peak at 90 percent of the global total. The bank attributes this change to a ban on initial coin offerings (ICOs) imposed by the authorities late last year. The government also banned trade between virtual currencies and RMB, due to financial risk.

Did China Save Its Financial System in the Nick of Time?

The banning of ICOs and direct trading in RMB-BTC and other crypto coins may have been a good move by Chinese authorities. The Chinese central bank claimed that the move helped the country in ensuring a zero-risk exit for 85 ICO trading platforms and 88 virtual currency exchanges since September 2017.

Blockchain analyst at Zhongchao Credit Card Industry Development Company Zhang Yifeng noted:

“The timely moves by regulators effectively fended off the impact of sharp ups and downs in virtual currency prices and led the global regulatory trend.”

A Chronology of China’s Strategic Crackdowns

In September 2017, the rapid expanse in cryptocurrency trading using RMB alerted the Chinese authorities. As is prevalent in the second largest economy in the world, the authorities immediately prohibited the use of their currency in buying Bitcoins or other virtual currencies. Executives from two of the largest crypto exchanges — OKCoin and Huobi — even faced travel bans.

On top of this, ICOs were outlawed and declared “unauthorised illegal public financing,” which is better suited for illegal security issuances and financial fraud. Soon after, the market players started to understand that the pastures are greener outside China. OKCoin quickly rebranded as OKEx and moved to Malta.

Binance, another major crypto exchange, which gained a reputation for allowing relatively new ICO-generated coins to be listed on its platform, moved to Malta after it was forced to cease operations in Japan, as well as in China. Huobi found a new thriving ground close to home, in the crypto-friendly jurisdiction of Singapore.

Did the Move Really Work?

As the companies started moving elsewhere, Chinese investors received 90 percent of their investment, amounting to a billion dollars back. This money was distributed across several ICOs before the prohibition. Some traders continued engaging with offshore exchanges, but their activities were ceased in February 2018.

Bitcoin trade limited in China concept. Source: shutterstock.com
Bitcoin trade limited in China concept. Source: shutterstock.com

Now Chinese citizens cannot participate in any activity related to exchanging and trading digital currencies. The authorities subsequently blacklisted several exchanges.

Miners have also been driven out of the country. Bitmain, one of the biggest names in mining, quickly created regional headquarters in Singapore while maintaining its mining activities in the US and Canada. Others have moved to different parts of the world, fearing a raid similar to one held in Tianjin city in April. During the event, 600 computers were confiscated by the police from a mining operation.

It doesn’t seem likely that enthusiastic Chinese investors have completely stopped their activity. Mainland investors could be using Hong Kong as a gateway to their crypto freedom, powered by Bitcoin mules, who buy cryptos for them. Reports suggest that these investors buy Bitcoins overseas and then smuggle them back home via Hong Kong to sell on private chat groups.

PBOC Happy to Kill Bitcoin Trading, RMB-BTC Trading Now Less Than 1 Percent of Global Total was originally found on [blokt] – Blockchain, Bitcoin & Cryptocurrency News.