Bitcoin trading platforms rush to contain damage

In first interview since central bank’s ban on IPO-like coin offerings, Tian Ying, vice-president of the bitcoin trading platform OkCoin says companies being forced into drastic strategic adjustments, if not complete overhauls

PUBLISHED : Tuesday, 19 September, 2017, 9:01pm
UPDATED : Wednesday, 20 September, 2017, 12:54pm

China’s sweeping ban on cryptocurrency trading is wreaking havoc on the country’s once thriving sector, forcing many firms into drastic strategic adjustments, if not complete overhauls.

“The management of OkCoin will discuss and announce its future plans once [we have] attended to customers’ withdrawals first,” said Tian Ying, vice-president of the bitcoin trading platform and blockchain service provider.

In her first interview since the central bank’s ban on IPO-like coin offerings, and an expanded crackdown on all digital currencies trading, Tian told the South China Morning Post it had been left with little time to think about its next step.

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“Right now, an orderly exit is the key. We are trying our best to tell customers and keep them from waiting if they decide to exchange their bitcoin for renminbi,” said Tian, adding the company is hiring extra staff to speed up customer services.

OkCoin and Huobi, two Beijing-based platforms announced over the weekend they would stop providing renminbi-denominated transaction services on all digital assets, by the end of October, under strict instruction by the People’s Bank of China.

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The move followed similar actions made by Shenzhen-based exchanges Bitkan and ViaBTC and Shanghai-based BTC China last week to cease all bitcoin trading in China by the end of the month.

The drastic crackdown also comes as market players had been expected to gather for a cryptocurrency industry conference this week in Hong Kong – but none of exchanges’ senior executives from Beijing are now expected to attend, according to one source.

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Themed “Shape the Future”, the conference has been organised by Bitkan and was originally expected to be held in the Chinese capital earlier this month. But it was later postponed and rescheduled for Hong Kong.

“With the regulatory scrutiny so intense, companies are being forced to put together clean-up plans, or even exit the business,” said one executive at a trading site, asking not to be named.

Regulators met for an emergency meeting last Friday with all Beijing-based trading platforms, including Huobi and OkCoin and announced an immediate bitcoin trading freeze.

The regulators have been especially strict on Beijing companies, lesser so with those in Shanghai and Shenzhen, said the source, anxious to underline the industry is doing everything in its power to limit financial risk.

“The government’s intention is clear – they don’t want to see any pressure on the renminbi as a result of bitcoin transactions.”

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The downside, of course, has been bewilderment among so called bitcoin miners – who create algorithm-based processes where computers compete to verify blocks of data on transactions – and investors.

A Wall Street Journal report hinted that a broader clampdown is likely to block all mainland access to websites of foreign bitcoin exchanges.

One his Twitter account, Yang Haipo, the founder of ViaBTC wrote: “Technically, China can’t ban bitcoin traffic, we have our own sync network. But if the China government says mining is illegal, we are f***ed.”

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Despite serving as trading platforms in China, the companies also provide various services ranging from bitcoin mining and US dollar-denominated trading to blockchain technology.

However, as for the future of bitcoin, Tian disagreed buying demand from China would completely die out.

“We can see bitcoin’s renminbi quote has risen over the past two days. Investors have to make their own judgements, on whether to hold on, trade on overseas platforms, or sell.”