New regulations are expected to affect Chinese bitcoin exchanges as soon as June. Citing anonymous sources on the matter, Chinese media outlet Caixin reported that the People’s Bank of China (PBoC) is about to issue new regulatory guidelines for bitcoin exchanges that cover anti-money laundering requirements and as well as new management guidelines.
The Chinese financial regulator is reportedly close to completions of their on-site inspections of the three largest bitcoin exchanges OKCoin, BTCChina, and Huobi. The next step will be the issuance of a “notice of administrative punishment” to each exchange, which will result in fines for the three companies for violating prevailing rules or regulations.
Furthermore, users of Chinese bitcoin exchanges will most likely have to a complete full identity verification process to trade bitcoin and to withdraw their funds from exchanges as part of the upcoming anti-money laundering regulations.
An Interesting Year for Bitcoin in China
Bitcoin traders in China have had an interesting year so far. First, the price of bitcoin surpassed the $1,000 mark for the first time in over three years on January 1, 2017. In the following week, the three dominant Chinese bitcoin exchanges, Huobi, OKCoin, and BTCChina announced that the PBoC was going to conduct on-site inspections of the exchanges to investigate possible market manipulation, money laundering, and unauthorized financing activities.
Following several meetings between the exchanges and the regulator, Chinese exchanges curbed their margin trading activities and later resorted to halting withdrawals from their exchanges, thereby, making it impossible for Chinese bitcoin traders to cash out their profits in fiat currency.
Chinese Traders Still Cannot Withdraw Funds
While new regulations may potentially curb bitcoin trading activities in mainland China, a completion of the Chinese financial regulator’s inspections of the country’s bitcoin exchanges should result in the three exchanges allowing users to withdraw their funds again for the first time in over three months.
Interestingly, despite the difficulties Chinese bitcoin traders have been facing in the past four and a half months, the price of bitcoin is still rising on the country’s exchanges suggesting that the demand for the cryptocurrency has in no way decreased among Chinese investors. This week, the price of bitcoin surpassed the ¥11,000 mark on Chinese cryptocurrency exchanges as bitcoin is experiencing a tremendous rally since the beginning of the year driving by an increase in bitcoin adoption in countries such as India and Japan, among other factors.