Indications that the Chinese central bank has stepped up its efforts to regulate the bitcoin market is evident from the fact that the Chinese bitcoin exchanges have disabled withdrawals of the cryptocurrency after meeting with the People's Bank of China.
Including measures such as setting up a task force to carry out inspections and ensure bitcoin exchanges had implemented anti-money laundering systems, the PBoC made announcements that it was looking into bitcoin throughout January.
It had met with nine exchanges to warn them they would be closed if they violated regulations, the central bank announced on Tuesday. And while the exchanges improve their anti-money laundering systems and customer identification measures, temporary disablement of bitcoin withdrawal (users can deposit and withdraw yuan but not bitcoins) for the next 30 days was announced by the three main Chinese bitcoin exchanges, BTCC, Houbi and OKCoin as a consequence of the meeting.
From near a one-month high of around $1063 to as low as $954, the price for bitcoin dropped sharply on Thursday due to the news of the meeting and the temporary ban on withdrawals. Bitcoin prices are currently trading around $964 as they have recovered marginally.
The move by the PBoC will be healthy for the market, bitcoin analysts believe despite the hit to prices.
"The PBoC moves to regulate Bitcoin more stringently will bring short term woes but will ultimately strengthen the ecosystem," Charles Hayter, chief executive and founder of digital currency comparison website CryptoCompare, said.
According to Hayter, respectability and rigor to the bitcoin market would be added by the moves by the PBoC and the improved systems.
The volume of bitcoin trading across China, which had become a cause for concern, would be ultimately slowed down promoted by these measures, along with the introduction of standard trading fees by Chinese exchanges.
From 10 million bitcoins per day, trading volumes on Chinese exchanges have fallen to a range of 30,000 to 90,000 according to CryptoCompare data. Behind bitcoin-dollar and bitcoin-yen pairs, Bitcoin-yuan trades is now around 26 percent even though such bitcoin-yuan trades made up 98 percent of market share.
"This has been a long time coming and many in the industry view these developments as a positive clean up. We already see liquidity resettling in other trading pairs like BTC/JPY & BTC/USD," Fran Strajnar, co-founder & CEO of data and research company Brave New Coin, told the media.
"These marketplace changes will inevitably slow nefarious activity and open channels to more and more institutional investors. In my opinion the 'PBoC cleanup' is the best thing that could have happened to bitcoin this year."
How to regulate bitcoin activity might now be considered by other central banks also.
"I think all governments are trying to figure out how they can adjust laws and regulations to this new field, allowing them to get the benefit of the technology while at the same time curbing any usage for illicit purposes," Linus Lindgren, strategic investor and advisor at BTCXIndia, said.
"My recommendation to any regulator wondering how to go ahead with this would be to involve the industry and work together to reach common goals."
(Source:www.cnbc.com)
Including measures such as setting up a task force to carry out inspections and ensure bitcoin exchanges had implemented anti-money laundering systems, the PBoC made announcements that it was looking into bitcoin throughout January.
It had met with nine exchanges to warn them they would be closed if they violated regulations, the central bank announced on Tuesday. And while the exchanges improve their anti-money laundering systems and customer identification measures, temporary disablement of bitcoin withdrawal (users can deposit and withdraw yuan but not bitcoins) for the next 30 days was announced by the three main Chinese bitcoin exchanges, BTCC, Houbi and OKCoin as a consequence of the meeting.
From near a one-month high of around $1063 to as low as $954, the price for bitcoin dropped sharply on Thursday due to the news of the meeting and the temporary ban on withdrawals. Bitcoin prices are currently trading around $964 as they have recovered marginally.
The move by the PBoC will be healthy for the market, bitcoin analysts believe despite the hit to prices.
"The PBoC moves to regulate Bitcoin more stringently will bring short term woes but will ultimately strengthen the ecosystem," Charles Hayter, chief executive and founder of digital currency comparison website CryptoCompare, said.
According to Hayter, respectability and rigor to the bitcoin market would be added by the moves by the PBoC and the improved systems.
The volume of bitcoin trading across China, which had become a cause for concern, would be ultimately slowed down promoted by these measures, along with the introduction of standard trading fees by Chinese exchanges.
From 10 million bitcoins per day, trading volumes on Chinese exchanges have fallen to a range of 30,000 to 90,000 according to CryptoCompare data. Behind bitcoin-dollar and bitcoin-yen pairs, Bitcoin-yuan trades is now around 26 percent even though such bitcoin-yuan trades made up 98 percent of market share.
"This has been a long time coming and many in the industry view these developments as a positive clean up. We already see liquidity resettling in other trading pairs like BTC/JPY & BTC/USD," Fran Strajnar, co-founder & CEO of data and research company Brave New Coin, told the media.
"These marketplace changes will inevitably slow nefarious activity and open channels to more and more institutional investors. In my opinion the 'PBoC cleanup' is the best thing that could have happened to bitcoin this year."
How to regulate bitcoin activity might now be considered by other central banks also.
"I think all governments are trying to figure out how they can adjust laws and regulations to this new field, allowing them to get the benefit of the technology while at the same time curbing any usage for illicit purposes," Linus Lindgren, strategic investor and advisor at BTCXIndia, said.
"My recommendation to any regulator wondering how to go ahead with this would be to involve the industry and work together to reach common goals."
(Source:www.cnbc.com)
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