Despite the Chinese government’s crackdown on initial coin offerings (ICOs) and cryptocurrency exchanges, local traders have invested in Bitcoin with a huge premium during its recent rally.
As Cryptocoinsnews previously reported, the Bitcoin price achieved a new all-time high at $5,920 last week, moving closer to the $6,000 region. Analysts including billionaire hedge fund investor Mike Novogratz predicted the Bitcoin price to surge even further in the mid-term, as an increasing number of institutional investors engage in cryptocurrency and Bitcoin trading.
China may not recognize bitcoin as a legal currency, but it seems to have a clear vision for a state-issued alternative.
At a meeting hosted by the International Telecommunication Union this week, Yao Qian, the Director of the Digital Currency Research Institute under the People's Bank of China, reportedly boasted about the potential of a state-owned digital currency, while suggesting that there is an inherent lack of value anchoring public cryptocurrencies like bitcoin.
According to a report by Yicai, Yao also framed a state-issued digital currency as a way to stabilize domestic fiat currency, while better securing country's financial status.
Harvard professor and renowned economist Kenneth Rogoff, who in the past argued for a reduction in the amount of physical cash, recently said that the bitcoin price “will collapse,” due to continued regulatory pressured from governments.
In his piece, written for The Guardian, Rogoff stated:
“My best guess is that in the long run, the technology will thrive, but that the price of bitcoin will collapse.
The Chinese government will likely resume cryptocurrency trading in the upcoming months with necessary Know Your Customer (KYC) and Anti-Money Laundering (AML) systems in place.
Earlier this week, Xinhua, the state-owned news publication of China, revealed that the Chinese government is concerned with criminal activities surrounding cryptocurrencies such as bitcoin. It emphasized that cryptocurrencies have become the “top choice” for underground economies and revealed that the government will take appropriate measures to regulate the market by implementing a licensing program and strict AML systems.
Taiwan will not regulate against initial coin offerings (ICOs) and cryptocurrencies like bitcoin and will avoid the hardline stance taken by the likes of China and South Korea.
In significant news today, Taiwan’s Financial Supervisory Commission chairman Wellington Koo has told a joint session of the parliament and the cabinet today that Taiwan will not follow the paths of China and South Korea in an outright ban on crypto-related activity. Instead, the head of Taiwan’s financial regulator pledged to adopt a friendlier stance to support the development and adoption of both cryptocurrencies and blockchain technology in the country.
Earlier today, on October 5, the cryptocurrency market and the majority of leading cryptocurrencies including bitcoin, Ethereum, and Litecoin endured a major correction, declining by over 4 percent in value. Particularly, the bitcoin price underperformed relative to other cryptocurrencies, dropping from $4,450 to $4,250 within the past three days.
On October 4, the bitcoin price sustained stability at the $4,250 margin, with upward momentum created by the authorization of Japanese cryptocurrency and bitcoin trading platforms.
Following the exit of the Chinese cryptocurrency exchange market caused by the Chinese government’s imposition of a nationwide ban on cryptocurrency trading platforms, Japan and South Korea have evolved into major bitcoin exchange markets and industries.
Emergence of Japan and South Korea as Major Bitcoin Markets
According to various cryptocurrency market data providers including CryptoCompare, Japan has secured 56.
China’s official press agency issued a statement condemning virtual currency as a tool used by the criminal underworld to evade government prosecution. The agency stated that regulators must take a hardline stance against cryptocurrency usage to prevent crime, although some of the regulations it proposed seemed to hint at potential future licensure for bitcoin exchanges.
As first reported by regional cryptocurrency news service cnLedger, the Xinhua News Agency published a statement calling for regulators to take a “zero tolerance” approach to cryptocurrency-related crime.
Over the past week, the bitcoin price has fully recovered from the Chinese government’s nationwide ban on cryptocurrency exchanges. Earlier today, on October 2, the price of bitcoin surpassed $4,430, nearing the interim target of $5,000 by most analysts in the bitcoin sector.
Since September 22, bitcoin has demonstrated a rapid rate of recovery, rebounding from $3,500 to $4,430 in a span of less than two weeks.
BTCC, an international cryptocurrency exchange with headquarters in China, has announced it has ceased all domestic trading activities.
On its website, BTCC now states that all local trading in yuan and cryptocurrencies has been officially suspended as of midday, September 30, Beijing time. The exchange stopped accepting deposits on September 27, with China-based users being advised to withdraw their funds from the exchange before the end of October.
Bitcoin exchange BTCC has closed its CNY trading platform in compliance with the China ICO ban, marking the end of an era for the bitcoin community both inside and outside of China.
BTCC made the announcement on Twitter, noting that it had operated for a “world record of 2,305 days.” Indeed, the vast majority of bitcoin users likely cannot remember a time before BTCC. Throughout the world, exchanges rose, fell, and occasionally scammed their customers, but BTCC remained.
China’s cryptocurrency ban could be a temporary move to appease international agencies and certain communist party members ahead of the upcoming Communist Party convention, according to Panos Mourdoukoutas, an economics author and professor at LIU Post in New York, writing in Forbes.
Earlier today, on September 29, the price of bitcoin and Ethereum declined by nearly three percent and seven percent respectively due to the South Korean government’s ban on domestic initial coin offerings (ICOs).
Cryptocoinsnews reported that the South Korean Financial Services Commision (FSC) officially announced its short-term plans of banning “all forms” of ICOs that are conducted by companies within South Korea.
Cryptocurrency exchange provider BTCC told its China-based users today that they must withdraw funds by October 30th ahead of a previously announced shutdown of services.
In a new blog post, BTCC affirmed it will no longer accept yuan or cryptocurrency deposits as of 12 p.m. local time on September 27. Withdrawals will be available until 12 p.m. local time on October 30 and will be completed within 72 hours of being requested, according to the post.
Earlier today, on September 27, the bitcoin price recorded a five percent gain within a 24-hour period, increasing from $3,930 to $4,115.
Bitcoin analysts and long-time traders including Tone Vays and Squeeze have reaffirmed their short-term interim targets of $5,000.
BTCC has stopped accepting yuan and cryptocurrency deposits today as it prepares to shutter its operations in China this month.
Chinese cryptocurrency giant BTCC, the operator of the oldest cryptocurrency exchange in what was previously the largest trading market in the world, has stopped accepting deposits today at 12:00 noon, Beijing time. The exchange first opened its trading platform seven years ago.
Today’s notice follows up the announcement from a fortnight ago, when BTCC confirmed it would “stop all trading” on September 30 following the regulatory crackdown led by Chinese financial authorities including China’s central bank.
Today, on September 23, the bitcoin price increased from $3,600 to $3,738, recording a daily increase of 4.88 percent. At today’s peak, the bitcoin price surpassed the $3,800 mark, showing signs of recovery from the largest price correction.
On September 20, less than three days ago, the price of bitcoin and most of the cryptocurrencies in the global market declined significantly.
Bitcoin price is struggling to recover from the $3,800 region. Earlier today, on September 22, bitcoin price fell by 7.35 percent from $3,750 demonstrating early signs of recovery on Wednesday.
The entire cryptocurrency market endured a major price correction as leading cryptocurrencies including bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Monero all recorded over 7 percent decline in value over the past 24 hours.
For the second time, in a matter of weeks, Jamie Dimon, CEO of JPMorgan Chase, has spoken out against cryptocurrencies and bitcoin.
In an interview with CNBC-TV18 in New Delhi, India, Dimon said:
Right now these crypto things are kind of a novelty. People think they’re kind of neat. But the bigger they get, the more governments are going to close them down.
The bitcoin price took a dive on Friday, initiating speculation that the market’s post-China hangover is not going away anytime soon.
Bitcoin entered the week on an incline, quickly recovering from its September 15 flash crash below $3,000. Within two days of that low-point, the bitcoin price had stabilized above $3,500. By September 18, bitcoin had cracked the $4,000 barrier for the first time since the downturn. However, bitcoin found itself unable to advance past that mark, and on September 21 it began to lose its footing.
China is clamping down on cryptocurrency, that much is clear. But while the developing story dominates headlines, a notable trend is the lack of official information. Chinese officials seem to systematically decline requests for comments, local sources are willing to provide information on condition of anonymity only, while leaked documents remain unverified.
Despite this lack of clarity, here’s what’s known so far.
Effects on Trading
The most important thing we know for sure is that Chinese bitcoin exchanges will be closing down, or at least exiting China.
Earlier today, on September 21, bitcoin price dipped below $3,900 after demonstrating strong signs of recovery on Monday.
On September 19, Cryptocoinsnews previously reported that bitcoin price surged to $4,040, increasing by over $440 in a 24-hour period.
Regardless of its recent crackdown on bitcoin exchanges and initial coin offerings (ICOs), China's government still appears committed to the potential of blockchain in other areas.
According to a report by Caixin, the China Academy of Information and Communications Technology (CAICT) – a research institution under the Ministry of Industry and Information Technology – has launched a research facility called the Trusted Blockchain Open Lab in order to support the ongoing development of the technology in China.
A prominent Chinese researcher has urged the People’s Bank of China (PBoC)–the country’s central bank–to adopt a state-backed digital currency “as soon as possible.”
Huang Zhen, a researcher at Central University of Finance and Economics, published this recommendation in the PBoC’s own Financial News.
After providing a survey of the PBoC’s recent steps to crack down on initial coin offerings (ICOs) and bitcoin exchanges, Huang says he expects the bank to launch its own “sovereign digital currency under the auspices of the central bank as soon as possible,” according to a rough translation.
Over the past week, many traders, analysts, and investors in the finance and cryptocurrency sectors have reacted to the crackdown on bitcoin by the Chinese government positively.
Investors such as billionaire early-stage investor Tim Draper, long-time bitcoin trader Josh Olszwicz, and prominent venture capital investor and Golden State Warriors owner Chamath Palihapitiya emphasized that the Chinese government’s decision to impose unnecessary restrictions on bitcoin trading and potentially bitcoin mining does not offer a real problem for bitcoin.