Update | Leveraged trading in bitcoins halted in China
Central Bank orders major trading platforms to halt leveraged trading business, and strengthen internal systems to curb money laundering
Leveraged trading in Bitcoins has been halted in China, nearly a week after the central bank launched its first-ever probe into trading platforms of the virtual currency, following a market crash.
Staff with OKCoin and Huobi, China’s top two bitcoin trading platforms, confirmed with the South China Morning Post late on Thursday that leveraged trading in bitcoins had been halted.
According to a notice posted on their official websites, no new margin financing services would be offered to investors. But both platforms said the probe led by the PBOC was still underway with the final results pending.
The People’s Bank of China (PBOC) said it had found that the bitcoin trading platform BTCC in Shanghai, for instance, had been running outside its business scope and providing shadow financing to investors.
While the other two top-three platforms, OKCoin and Huobi, both based in Beijing, had violated rules by providing margin financing to investors and had not set up anti-money laundry systems internally, Shanghai-based Paper.cn earlier reported.
Investors were able to borrow up to four times worth the money being used as collateral to buy bitcoins from the major platforms, via margin financing services. They could also borrow bitcoins with the leverage for short-selling purposes.