Beijing bans bitcoin, but when did it all go wrong for cryptocurrencies in China?
With the announcement that it plans to block all websites related to cryptocurrency trading and initial coin offerings – including foreign platforms – Beijing has left no one in any doubt of its position on the highly volatile commodity.
But its views on the currency, or asset class – depending on your point of view – has not always been so fervent, as this timeline shows:
Bitcoin is barely on the radar of financial regulators as China adopts a relatively hands off approach to the cryptocurrency.
The People’s Bank of China (PBOC) and four other financial regulators issue a joint notice outlining the risks associated with bitcoin.
Beijing states that it is not a currency, and prohibits banks and other financial institutes from trading in it. At the same time, the government acknowledges the cryptocurrency as a “commodity traded online” and allows the public to buy and sell it as they please, with its only proviso being that they do so at their own risk.
Central bank governor Zhou Xiaochuan describes bitcoin as an asset class – like rare stamps – and says the government is not even considering banning it.
The PBOC says it plans to issue a sovereign digital currency that could help to reduce the cost of circulating banknotes, promote economic activity and aid the fight against money-laundering.
After conducting investigations at China’s three biggest bitcoin exchanges – BTC China, Huobi and OkCoin – in Beijing and Shanghai, the central bank accuses them of a lack of internal risk controls and issues a warning to investors to that effect.
Following the inspections, the exchanges begin upgrading their security and anti-money-laundering systems, which leads to a temporary suspension on all withdrawals of bitcoin and Litecoin being introduced in February.
The central bank sets up a research institute dedicated to digital currencies.
Chinese exchanges lift their suspension on withdrawals of cryptocurrencies.
Beijing deems initial coin offerings illegal and orders all mainland-based cryptocurrency exchanges to shut down.
The Leading Group of Internet Financial Risks Remediation – China’s top internet-finance regulator – issues a notice asking local governments to “actively guide” bitcoin-mining operations to “orderly” quit the business.
The central bank – according to a report by the official Securities Times – orders financial institutions to stop providing banking services or funding for any activity related to cryptocurrencies.