China calls for reining in risks in surging bitcoin market
China currently has more than one million bitcoin investors with total investments of several billions of yuan, says Xinhua
China’s official Xinhua News Agency has called for reining in the risks from bitcoin trading even though trading volume of the virtual currency in Chinese yuan has dropped from 95 per cent to 15 per cent this year in the global market, an indication that Chinese authorities’ regulatory efforts are paying off.
“The trading volume and turnover on major bitcoin trading platforms in Beijing have plunged more than 99 per cent compared to the end of 2016,” Xinhua, the mouthpiece of the Chinese communist party said in an article. “The trading volume of bitcoin in Chinese yuan has also dropped from 95 per cent to 15 per cent in the global market, showing the shift in cryptocurrency trading being initiated by Chinese buyers to international buyers.”
Bitcoin has grown massively in 2017, with the digital currency hitting a record US$4,294.50 level on Friday, according to Cryptocompare.com, a website that tracks live prices of digital currencies from 25 of the top crypto exchanges globally. This represented an approximately 348 per cent rise, year to date.
Japan and South Korea have seen the most visible inflows into the bitcoin market this year as regulatory development in the two markets, including the Japanese government’s recognition of bitcoin as legal tender in April, boosted investor sentiments.
With the stratospheric price rise of the virtual currency, a single bitcoin is now worth around 28,000 yuan, up 55 per cent from 18,000 yuan in early August, according to Xinhua.
The news article indicated that further regulatory measures may be put in place, ahead of the key 19th party congress in the autumn.
“It is a usual move for the Chinese government to voice their opinions through state media first, before the conduct any measures on various issues,” said Professor Chong Tai-Leung from the department of economics at the Chinese University of Hong Kong.
China’s financial watchdogs have been tightening controls on the crypto currency. The People’s Bank of China has conducted several rounds of inspections on major bitcoin trading platforms since early 2017, and discovered that some of the operators had not fully fulfilled their anti-money laundering obligation, and had been illegally conducting financing business, according to Xinhua.
The PBOC considers bitcoin a commodity and not a currency, which ruled it out of their existing regulatory coverage in late 2013.
Some investors and industry professionals are wary of the risks from the bitcoin market, fearing that it may be hit with frauds just like those hitting the peer-to-peer (P2P) lending sector last year.
China has over one million bitcoin investors, with the total investments of several billions of yuan, according to data gathered from the country’s major Bitcoin trading platforms, Xinhua said.