Chinese bitcoin investors see holdings partly frozen

Three Chinese exchanges suspended bitcoin withdrawl services to enhance their anti-money laundering measures in compliance with central bank’s order

PUBLISHED : Friday, 10 February, 2017, 2:44pm
UPDATED : Friday, 10 February, 2017, 2:44pm

Millions of bitcoin investors in China are seeing their assets partly frozen, as three major bitcoin trading platforms in the country have suspended “bitcoin withdrawal business”, as they respond to China’s central bank’s call to strengthen anti-money laundry functions.

Huobi, OKCoin and BTC China issued announcements respectively in late Thursday, saying they would suspend the service of withdrawing bitcoin from the platforms. They all said the measures were introduced according to the central bank requirements. Conversion to and from the yuan is not affected and the curbs will be dropped after updates to compliance systems, the exchanges said.

Zhao Dong, owner of Jiandong Tech, a company that buys and sells bitcoin, said the new rule meant investors would be unable to transfer their holding of bitcoins back to their own purses.

“To cash out, investors could only sell the bitcoins for yuan, as yuan withdrawal is still feasible on the platform -- this is a huge weigh on the bitcoin prices,” he said.

On Wednesday, the People’s Bank of China (PBOC) told nine smaller bitcoin venues at a meeting in Beijing that it would close exchanges that violate rules on foreign exchange management, money laundering, or payment and settlement.

Bitcoin is trading at 6,691 yuan each on OKCoin at 2.10 pm.

Speculation, derivative products, leveraged betting and program trading pushed up the price of bitcoin by more than 260 per cent since early 2016, to hit a historic high of 8,995 yuan on January 5, but a sudden price correction on the same day.