China’s Regulatory Crackdown Forces - More Bitcoin Exchange Closures

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China’s Regulatory Crackdown Forces--More Bitcoin Exchange Closures

  Beijing has ordered all affected bitcoin exchanges to post a notice of their closure. All exchanges that deal with crypto currencies in China must shut down operations to stay compliant with the country’s regulators. On september.14.the exchange BTCC which is one of the largest bitcoins trading platforms  in China announced it was closing the Chinese bitcoin trading business on September 30,but the other businesses of BTCC are unaffected. The other bitcoins exchange platform Viabtc is also shutting down operations of bitcoin trading in mainland China on the same day. The price of bitcoin has decreased 38 percent since the two Chinese exchanges made announcements because many customers urged to withdraw their funds quickly.

  On September 13, Chinese Finance Association of Internet has published the article “On the hint of preventing the risk of so-called "virtual currency" such as bitcoin”.The article is pointed out that the number of stakeholders in the Bitcoin trading platform is widening and the speculative atmosphere is strong. It is a tool for criminal activities such as money laundering, drug trafficking, smuggling and illegal fund-raising. In fact, as early as 2013, the Chinese central bank to specify that the bitcoin as "net virtual goods", not the legal currency in China. 

  The virtual currency such as Bitcoin has many characteristics such as  the anonymity of the virtual currency, decentralized, can not be tampered with, cannot be traceable and so on. Those traits increase the monetary policy monitoring difficulty, making the virtual currency is easy to become a cross-border money laundering tools. Virtual currency is increasingly becoming an accomplice of criminal activities. In China, there are 98 percent of the virtual currency transactions is through the currency trading platform but there are many risks to these trading platforms. One situation is the carrying money absconded. There is also a situation where cybersecurity and risk prevention is inadequate because of its open source therefore making the virtual currency under the risk of theft by hackers. On the other hand, the closure of bitcoin trading in China which may make an increase in the investment in China’s stock market.