Two of China's Biggest Exchanges Stop Bitcoin Withdrawals

http://www.coindesk.com/two-chinas-biggest-exchanges-stop-bitcoin-withdrawals/

by joeyspn • 9 years ago

74 46 9 years ago

chollida1• 9 years ago

I'm not sure if this is good or bad.

On one hand, having the government lay down a set of rules for the exchanges to follow could be seen as a stabilizing force.

On the other hand, it also, in my mind, increases the likely hood that if the government becomes unhappy with the exchanges that all the exchanges will be shutdown at once, which isn't great for bitcoin.

Big question I'd like answered.....

If I hold bitcoin, I'd do some very serious looking into what happens if most of china's exchanges and miners suddenly are brought off line for a couple of weeks.

I'm mostly interested in the secondary effects.

- ie will it lead to mass redemptions at other exchanges?

- which exchanges are fully cashed up? and which are working with fractional cash reserves?

lightedman3• 9 years ago

"If I hold bitcoin, I'd do some very serious looking into what happens if most of china's exchanges and miners suddenly are brought off line for a couple of weeks."

As much as I don't like bitcoin, there is one bit of robustness built-in. If China were to shut down all of the exchanges and farms, the balance of hashing power for the bitcoin network would essentially leave China and be split between the remaining connected exchanges. This would hurt yuan/bitcoin rates, but would probably stabilize rates for the rest of the world economies attempting to utilize it.

fosco• 9 years ago

Thanks for this explanation.

What are you thoughts if China had the goal of making the Yuan/bitcoin rate worth less to increase exports...this sounds like it could be one of many actions they could decide to take.

I find this incredibly interesting.

adamu__• 9 years ago

If China were to shut down bitcoing mining, my understanding is that the worst case scenario is much more dire. The network only adjusts the 'difficulty' relative to current network hash power every 2,016 blocks. Depending on the severity of the overall hash power reduction, new block discovery might slow down significantly. This would also delay a recalculation of the new difficulty accommodating the reduction in hash power.

The network could be severely throttled for weeks.

nonbel• 9 years ago

"I don't like bitcoin...hashing power for the bitcoin network would essentially leave China and be split between the remaining connected exchanges"

Exchanges aren't necessarily the miners. Your first phrase suggests you may not know much about bitcoin, but maybe you have info I am missing. Are all the big exchanges also miners now?

Phlarp2• 9 years ago

which exchanges are fully cashed up? and which are working with fractional cash reserves?

If an exchange is running a fractional reserve then they aren't an exchange, they are an insolvent fraud.

jbmorgado2• 9 years ago

And you will only know for sure when they finally stop withdrawals all together... just like MtGox did.

Curbob• 9 years ago

at the prices of bitcoin right now, about every day I wonder if it's the day to cash out. While I see these changes are to stop money laundering, I wonder what percentage of the bitcoin worth is from it being used for money laundering.

bdcravens5• 9 years ago

And more importantly, how much have you benefited from it? I don't mean in the moral sense, but as in how much of Bitcoin's gains have come from a house of cards with no long-term foundation, and how much from "organic" growth as a currency?

logicallee• 9 years ago

I hate bitcoin because by design it burns resources, polluting the environment, and by design it enables extralegal monetary remittance subject to the laws of no one, no matter how "legitimate" those laws and no matter how well they reflect the will of the governed. The idea of government is fundamental: otherwise, might makes right. Bitcoin makes it impossible to ensure anything like that is happening.

I state all this as my "credentials" for making the statement that theoretically it is not a house of cards. Transactions could take 72 hours to clear. The blockchain could be 1.7 terabytes in size. And transactions could cost hundreds of dollars. None of this would stop bitgold from having a market capitalization in the hundreds of billions. (What could stop it is some technical bugs or mismanagement.)

It is emphatically not a house of cards. (But I don't like it.)

In what way is it a house of cards? It is a legitimately scarce resource being legitimately used exactly as designed.

sayurichick• 9 years ago

my interest in btc began to increase when I started to learn about "money".

Did you know that all fiat (government issued/backed) currency is inflationary by nature? The reason the Swiss used to be regarded for having the strongest currency was because it was still backed by gold. They are mostly fiat now sadly.

So you say Bitcoin has no long term foundation? How about a hedge against inflation? the USD will ALWAYS lose value over time ABSOLUTELY. If I don't want to lose the value of my fiat, and there is enough people who also feel the same way by exchanging it for cryptocurrency, in which direction can we expect the price of bitcoin to go ?

*sidenote - bitcoin is capped at 21 million tokens, hence NOT inflationary.

Symmetry• 9 years ago

I expect money laundering is only a small fraction. On the other hand, the use of Bitcoin to evade currency controls and take legitimately earned money out of China is probably a large fraction of total Bitcoin use.

brilliantcode2• 9 years ago

I'm puzzled as to why the prices have not collapsed. Removing China from Bitcoin....isn't there a big shock in the hash rate and thus the prices?

placeybordeaux• 9 years ago

Why do you think the hash rate will change? This is talking about the exchanges not the mines.

Animats2• 9 years ago

If you have anything in a Bitcoin exchange in China, get it out now. Even if you have to take it in RMB. It's not clear if those operations have 100% of the reserves they're supposed to have. Do you want to gamble on that?

vkou• 9 years ago

It seems that contrary to discussion in yesterday's bitcoin thread [1], this is not 'unnecessary FUD.'

[1] https://news.ycombinator.com/reply?id=13601083&goto=item%3Fi...

bitJericho2• 9 years ago

The following is my exchange if anybodys looking for a new one. http://bitcoinsexchange.itmustbetrue.com

LeifCarrotson• 9 years ago

Has the same problem as Expert's Exchange had back in the day.

Idea: A registrar service that helps to identify and avoid awkward lexical ambiguities like this one. Or one which generates them!

gukov• 9 years ago

Doesn't anyone look at the domains they click...

deftnerd• 9 years ago

Quit trying to scam people.

bitJericho2• 9 years ago

Didn't you read the copy? It's totally legit.

Animats2• 9 years ago

Both exchanges are still allowing withdrawals in renminbi. If you have any funds there, get them out now.

The statements from both exchanges are almost identical, indicating the statements were dictated to them. The PBOC itself has a statement: [1] (Reuters summary [2])

"Following the early January on the "fire network" and "currency" two major Bitcoin currency trading platform to carry out inspection, the afternoon of February 8, the People's Bank business management department inspection team also engaged in other bitcoin currency transactions (List of companies: CHBTC, BtcTrade, HaoBTC, Yunbi, Yuanbao, BTC100, Jubi, BitBays and Dahonghuo.)

"The main person in charge of Bitcoin trading platform to inform the current Bitcoin trading platform problems, suggesting the trading platform may exist legal risks, policy risks and technical risks, understand the operation of the nine trading platform, and put forward specific requirements Shall not violate the state's laws and regulations on anti-money laundering, foreign exchange administration, payment and settlement, etc., and shall not violate the laws of the State on taxation and administration of industry and commerce advertisements, and so on, and may not engage in money laundering activities. If there is a Bitcoin trading platform in violation of the above requirements, (and) the circumstances are serious, the inspection team will be brought to the relevant departments to be closed down according to law."

The PBOC had previously, back in January, made some exchanges stop allowing users to trade on margin. That's what the first line is about.

[1] http://beijing.pbc.gov.cn/beijing/132005/3248926/index.html [2] http://www.reuters.com/article/us-china-bitcoin-idUSKBN15O1C...

contingencies• 9 years ago

So basically, reading between the lines as a long term China resident and also the first employee of a major US cryptocurrency exchange, the Chinese government's 人民银行 (renminyinhang; People's Bank) has met with domestic exchanges and requested immediate additional processes on withdrawls. These probably include government reporting and/or blacklist processing. Since US exchanges are already subject to AML/KYC processes, this merely brings Chinese exchanges roughly in line with their US counterparts. I can see nothing to imply any additional restrictions so far.

Zooming out a little, there is good reason to believe that the Chinese government is less afraid of Bitcoin than the US, because Chinese mobile payment penetration through wholly owned systems (mostly WeChat) is already near 100%. Domestic transactions are therefore pretty much safe from Bitcoin... which offers slower settlement with more hassle on a much smaller range of goods and services. Also, relative to the US, taxation is very low and easily calculable across all of China (regardless of product type, buyer and seller location) so the appeal of Bitcoin for shortcutting that overhead is not present, as it is within the US with its famously antiquated multi-state tax nexus conundrums.

Markoff• 9 years ago

removing Bitcoin withdrawal means basically stop to capital outflow which could be circumvented by using Bitcoin instead of RMB, this just put Bitcoin in line with RMB and make it more difficult to get money out of China

arisAlexis• 9 years ago

the chinese are not fools. they have a good control over the btc network hash why would they give up this power?

BrailleHunting• 9 years ago

Keeping anything in China is inherently risky. Rights (ie property, monetary, human, civil, etc.) aren't consistently certain from one day to the next.

Two of China's Biggest Exchanges Stop Bitcoin Withdrawals

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