China to Shut Bitcoin Exchanges?

https://www.wsj.com/articles/china-to-shut-bitcoin-exchanges-sources-1505100862

by verroq • 9 years ago

142 91 9 years ago

wsj.com

chj• 9 years ago

Since BTC is an efficient way to pump money out of China, this will happen sooner or later.

sillysaurus39• 9 years ago

No paywall: http://archive.is/i0PFc

vit052• 9 years ago

"The country’s central bank has led a draft of instructions that would ban Chinese platforms from providing virtual currency trading services, according to people familiar with the matter. The move comes after months of scrutiny by Beijing, including a ban last week in China on initial coin offerings, a kind of fundraising via virtual currencies.

Regulators in China have been investigating the domestic market for bitcoin and other virtual currencies since the beginning of the year. For a while, officials considered enacting antimoney-laundering rules on exchanges, even circulating a draft of such rules for them to follow."

OkCoin prices are still going up. The only "important" person that has said this would happen was the VIABTC CEO on twitter. Nobody believes, but now, I think is true

option_greek5• 9 years ago

Good luck banning or controlling Bitcoin - especially when there is a satellite streaming down blockchain. I understand their motive though. Large sums of money can be used for anything. Including regime change or coup.

matt_wulfeck• 9 years ago

I think you're underestimating China's ability to "ban" something. They don't need to make it technically impossible, they just need to make it very dangerous and burdensome. And they've basically mastered the art of internet surveillance at this point.

option_greek5• 9 years ago

I think they have very few options to control or destroy btc: 1) Force chinese miners to perform 51% attack for them 2) Use their own super computers to do so

At the worst btc will fall and another might take its place. I would see these developments are exciting because the decentralization part hasn't been tested much. certainly not by a nation state actor. If BTC survives this, it will truly shine.

prostoalex5• 9 years ago

especially when there is a satellite streaming down blockchain

If a satellite link can bypass government controls, why has it not been used by Google, FB, New York Times and numerous others banned in China?

jMyles2• 9 years ago

Do you really think comparing interactive web apps, which require a bunch of complex di-directional traffic, with a blockchain, which just needs to be routinely copied from a uni-directional source, is fair?

option_greek5• 9 years ago

Because to verify a blockchain entry, you only need to download it. To use G,FB or NYT, you need two way traffic (actively sending out a request). Verifying independently this way is important because you wouldn't know if the government has forked the chain otherwise.

bdcravens11• 9 years ago

There's really 2 aspects to Bitcoin regulation: 1) the technology itself (hard to regulate, possibly filtered at firewall level however) and 2) the intersection of Bitcoin and fiat (ie, the exchanges). #2 is much easier to regulate, and in the end, far more effective

seizethecheese• 9 years ago

Sell! Sell! Sell!

SeoxyS4• 9 years ago

For anyone wondering how BTC is used as a way to evade Chinese currency controls, I just came to this realization today: people aren't buying bitcoin locally to send it out of the country: they're buying cheap coal electricity, using it to mine bitcoin, and then liquidating that in foreign exchanges.

devdoomari• 9 years ago

doesn't that mean 'almost free foreign currency' for the Chinese? why block free money? it's not like yuan is leaking out...

omarchowdhury• 9 years ago

This realization is incorrect. The amount of BTC generated globally[1] per day is minuscule compared to CNY/BTC volume[2]. Besides, they're selling the BTC they mine for more yuan.

[1] $7M [2] OKCoin.cn alone does $100M a day on the BTC/CNY pair.

SeoxyS4• 9 years ago

That CNY traded in China remains stuck in China. Whoever sold the BTC for CNY now has to deal with the restricted currency

Presumably most of that BTC/CNY trading is being traded for capital gains, not as a way to try to evade currency controls.

MichaelGG2• 9 years ago

There's only around $8M a day in mining, at today's prices. So half that a month or so ago. Minus actual costs for ASICs and electric (a significant amount!). It's some flow, but can't justify the trade volumes right?

esturk• 9 years ago

Why can't one just buy BTC in yuan and liquidate it in another foreign currency?

SeoxyS4• 9 years ago

Who wants to sell you something that's not restricted for something that is? Unless you're willing to pay a significant premium over its real value.

pmorici3• 9 years ago

The same could be said for any export they produce in China doesn't matter if it is Bitcoin or tube socks.

HeavenFox2• 9 years ago

which, now that I think about it, isn't that different from using the electricity to produce widget, export the said widget, and get dollars in return

modeless4• 9 years ago

That's not evading currency controls, it's called exporting. It's not illegal, it's encouraged.

odiroot• 9 years ago

I'm sorry but you're completely wrong on this one, see other comments.

Moreover most big mining operations use alternative energy sources, usually hydropower.

SeoxyS4• 9 years ago

Power is fungible. Hydro power capacity is capped. Any amount of energy derived from hydro power increases demand from coal from someone else by an equal amount.

avenoir• 9 years ago

I don't follow BTC news often but it seems like anytime the price goes up or down it is somehow tied to an event in China. Makes me wonder how much of bitcoin's skyrocketing value is actually based on China's market rather than natural growth. I guess we'll find out soon. In more positive news, it looks like Russia is on path to legalize Bitcoin [1]

[1] https://cointelegraph.com/news/russia-is-working-on-legalizi...

sillysaurus39• 9 years ago

Eh, people were saying the same thing about silk road. Surprise: silk road got shut down and BTC's price didn't drop at all.

I believe BTC's price is inherently a weighted random walk driven by speculation rather than rational reasons. Not everyone shares this belief, and it's human nature to look for explanations when there aren't any.

(An unknowable explanation is still unknowable.)

narrator• 9 years ago

All bubbles have money coming in from somewhere. The Keynsian "Animal Spirits" concept is almost as much B.S as Marxist "Productive Forces".

bdcravens11• 9 years ago

silk road got shut down and BTC's price didn't drop at all

Yes it did: (though I assume you mean over the longer term, but I don't think that's how most would read that comment)

https://www.theguardian.com/technology/2013/oct/03/bitcoin-p...

modeless4• 9 years ago

Recent growth has been coming more from South Korea and Japan. This news has already hurt the price, but it's likely priced in now, and there are plenty of other markets out there. Speculation will continue.

knodi• 9 years ago

time for a BTC crash.

bdcravens11• 9 years ago

I think much of what the WSJ is reporting was reported over 24 hours ago, and there was a bit of a dip at that time. Most movements in BTC happen before MSM reports on it.

tudorconstantin• 9 years ago

It would be interesting to see how this unravels from a game theory perspective. Right now the crypto coin market cap is at around 150 billion USD (up from 15-18 bn in january this year). Not a huge amount by any means when compared to a big country's GDP. The daily traded volume is about 5-10 billions.

If China bans the exchanges now, they basically opt-out from the value created by the flow of some of these billions. Sure, the prices and daily volumes would drop on the short/medium term, but this would only give one last chance to people left out to join and buy crypto at low prices. When the market cap and prices would grow back, China would be left out. Who would trust them anymore to start a blockchain business there?

alextheparrot• 9 years ago

It is also possible that a component of Bitcoin's value is transferring money out of China, in which case prices may start to reflect this decrease in utility.

hbosch• 9 years ago

The Chinese state does not need money, not even "billions" - power and influence are much more important, and exerting that influence to gain control is much more valuable than any amount of money unless you're talking in trillions. And even then...?

There is no "win" for China (the state) by letting its population freely speculate and trade in crypto that they don't control... much better to shut it down.

probe• 9 years ago

One of my favorite questions to ask about this topic is:

"Given what you know today (and how blockchain, cryptocurrencies, and decentralized networks work), would you still design the financial system and other systems (ex. identity, currencies, etc) the same way they are designed today?"

My answer is no, and that's why I'm still bullish on decentralized technology and systems winning in the long-term. In that case, investments in Bitcoin and Ethereum are merely call options for an entirely new financial world and a risk still worth betting on.

dilemma• 9 years ago

Bitcoin isn't decentralized.

sillysaurus39• 9 years ago

This is going to need a lot more text to justify.

sebleon• 9 years ago

To switch to another financial system, the alternative has to be significantly better (eg. 10x). Curious what advantages you'd point out?

rkagerer2• 9 years ago

My gut feeling is there's some truth to the rumour. Related resources:

• Original Caixin Report that sparked all this: http://finance.caixin.com/2017-09-08/101142797.html

• (RECOMMENDED) Good English translation of above article: https://docs.google.com/document/d/1sNYGpwj3EKkRhlejoycytZLq...

• Shorter English announcement from Caixin: http://www.caixinglobal.com/2017-09-09/101142821.html

• Coindesk article pointing out Caixin has been spot-on in the past (re their Sep 2 leak regarding ICO fundraising): https://www.coindesk.com/report-casts-doubt-future-chinas-bi...

• Related official news out of China regarding ICO ban: https://www.reddit.com/r/ethtrader/comments/6ywtkt/the_actua...

• Tweet from CEO of ViaBTC saying "China will shut down all exchanges": https://www.cryptocoinsnews.com/viabtc-ceo-china-will-ban-bi...

It's not the first time China's cracked down on virtual currency <--> fiat trading, but if true this could be more intense than their prior efforts.

(Note this is a repost of my comment made to a previous HackerNews article on the topic)

vit052• 9 years ago

People are acting exactly like people that participate in pyramid schemes. Denied, saying it is fake, searching for stupid reasons. That is just pathetic and horrible for the future of cryptocurrency.

Things like this will happen and need to be discussed. It appears that the ban will be for the trade of fiat for Bitcoin. Everything else, including p2p trade, will be allowed. So, the price of Bitcoin will fall a little more, but, eventually, they will find ways to get crypto currency.

Maybe a new coin, maybe more regulations or maybe people2people trades will be the future. There are already several great products emerging that do not need exchanges to trade crypto like 0x, Kyber.Network and even Ethertrade.

mrb3• 9 years ago

The source for this news story is an anonymous government employee who told Caixin: http://www.caixinglobal.com/2017-09-09/101142821.html

will_brown• 9 years ago

How is something defined as distributed and decentralized when it is regulated by each country? If China tanks the value of the major cryptocurrencies by 20% with just 2 regulations is a week, isn't the rest just academic?

As everyone saw one day the founder of Ethereum was meeting with Putin and sending out press releases of potential partnership, the next Putin is putting out his own press releases questioning why he would ever embrace any foreign blockchain/crypto, that Russia will launch its own.

If cryptocurrency can be regulated by individual countries like we saw with china this last week, then I expect the underlying blockchain technology can be regulated too, and we will begin seeing countries picking winners, basically who can be a node on the blockchain and who can mine.

People think/thought blockchain equivalent to an automated unregulatable technology, but once you are talking about billions you impact people with power, they will raise and lower price at their will and take the people's technology from them through regulation.

prostoalex5• 9 years ago

then I expect the underlying blockchain technology can be regulated too

You don't even need any explicit regulation - a country-level firewall will likely fork the chain.

teknologist2• 9 years ago

Some government actions drive it up (like what happened in Cyprus for instance). It seems market participants have got rather attached to this whole ICO thing as a way to make a quick buck and have lost sight of the original vision. The wall street-ization of the blockchain.

HeavenFox2• 9 years ago

Given the history of strong government control of economy in China, I am kind of surprised this didn't happen sooner. Personally, I think the recent ICO fever is likely the final straw.

In Chinese society, the citizens expect the government to protect them from harm, whether the government is responsible for them or not. On the other hand, the government values stability above everything else, in order to maintain their regime. Now, there's this ICO thing, which has the potential to scam millions of Chinese (and trust me, it will happen), who will inevitably protest until their money is returned, you wonder what's gonna happen…

People have received DEATH SENTENCE before for scamming investors[1]. Let that sink in.

edit: someone mentioned capital control. While I agree this is probably one of the reasons, I doubt it's the biggest. Sure, having money flowing out of the country gives the government headache, compared to having thousands of people on the street holding signs, it seems like a rather minor one. Plus, if you want to move millions of dollars, you probably won't trust whatever-coin to do the job. There are tons of ways of doing that, and the government has bigger fish to fry.

[1] https://en.m.wikipedia.org/wiki/Yilishen_Tianxi_Group

teknologist2• 9 years ago

Isn't this a bit contradictory? If the government really wanted to protect people from harm they wouldn't allow ponzi schemes that urge people to invest in boxes of ants to advertise on state television. Oh, and:

“The company was endorsed by Chinese government officials, and Wang, now the chief executive, was photographed with the former Minister of Commerce of the People's Republic of China, Bo Xilai.”

factorialboy• 9 years ago

In Chinese society, the citizens expect the government to protect them from harm

Mao would disagree.

mrb3• 9 years ago

Speculation: It seems China is doing this to replace them all with a single government-run Bitcoin exchange:

https://mobile.twitter.com/cnLedger/status/90709502238582374...

This would allow them to associate an identity behind most inbound and outbound Bitcoin transactions to/from the exchange...

"Perfect control, classic China" as a Twitter user said.

sillysaurus39• 9 years ago

It's pretty trivial to convert from BTC to Monero and back. There are even services that will send a specific address BTC automatically if you send them Monero. So unless the exchange is going to ban mixed coins and Monero-based sources, that won't lead to Orwellian-style undodgeable monitoring of every transaction.

It's an option to do that, of course, but it would be precedent-setting. No one else bans BTC that came in via a Monero service.

topmonk• 9 years ago

I don't see the mention of BTC anywhere in the app that is released or in the announcements from that twitter log. They talk about using "blockchain technology", which I assume means a new coin.

em3rgent0rdr2• 9 years ago

reminds me of scene in Mr. Robot where E-Corp exec is proposing a deal to a govt official: "With eCoin we control the ledger… and the mining servers. We are the authority! I will make sure you have visibility into every single wallet that’s open, every loan, every transaction…"

kihadi• 9 years ago

a single entity controlling a cryptocurrency defeats the purpose of cryptocurrency. just issue something like amazon credit or whatever.

just one example of how weak the writing is on mr. robot. the basis of everything must be "Lol hackers bro amirite?"

partiallypro• 9 years ago

Considering people in China are using Bitcoin to skirt Chinese capital controls, this would be the "right" move (in the mind of the government.) If China were to hamfistedly crack down on bitcoin and centralize exchanges under government control, bitcoin would collapse (imo.) I honestly think such measures are inevitable from Chinese officials. Though the problem I'm sure is that there are some officials or people tied to them that now holds coins, which gives them some conflict. Bitcoin as an industry is sort of baffling to me.

wallacoloo• 9 years ago

One of the touted benefits of bitcoin and related cryptocurrencies is the fact that transactions on such networks cannot be easily censored, even though not many people experience this kind of thing directly with classic currencies. Therefore, I find it amusing that a prime example of why we need non-censurable currencies is provided by the difficulty of exchanging them in the first place.

panarky• 9 years ago

Analysts say more activity is moving underground, where individuals can send virtual currencies to each other using private addresses, which serve like safe-deposit boxes.

Regulators will likely to have to tolerate noncommercial trading of virtual currencies. “The government also doesn’t have the power to control” that.

---

Centralized exchanges have always been the achilles heel of cryptocurrency ecosystem.

Better to keep it distributed with (a) smart contracts and (b) lightning network.

sjcsjc• 9 years ago

One-party communist state opposed to free-market financial innovation.

In other news, water is wet.

pmorici3• 9 years ago

I would take this with a huge grain of salt. This appears to be a rehashing of news from last week that China planed to ban trading of ICO tokens. The news was thinly sourced and it seems like people misconstrued the rumored ICO ban to mean a general crypto-currency trading ban.

Historically there have been more stories like this than I can count where some random source claims the PBOC is going to "ban Bitcoin" and it has always proven to be false. The worst that has happened is the tightening of regulations on Bitcoin exchange providers. There is even a common meme that has been going around for years.[0]

[0] https://www.youtube.com/watch?v=Ry6PpRXk0dQ

modeless4• 9 years ago

some random source

Sorry, Caixin and WSJ and Bloomberg are not "some random source". I know "China bans Bitcoin" has been a joke meme in the community for years, but this time it's the real deal.

pmorici3• 9 years ago

Pretty sure this is just a reprint of the same rumors reported in Caixin last week.

l1feh4ck• 9 years ago

>To Read the Full Story Subscribe or Sign In.

Forcing users to Subscribe or Sign In to read the content while allowing the search engine crawlers without any barriers should be considered as malpractice. This was exactly the kind of stuff Quora was doing but at least they had the decency of doing this on users coming from internal links.

modeless4• 9 years ago

They don't let the crawlers in either. Do a search. You'll see the snippet only contains the same part of the article you see before the paywall.

acty1• 9 years ago

That's why we need decentralized exchanges like www.ether.bid based on 0x protocol

bdcravens11• 9 years ago

This would only let you exchange for tokens, right? 95% of the trading public won't give anything a look if you can't trade for fiat.

rkagerer2• 9 years ago

Looks like there's a brand new article, behind a Caixin paywall. Does anyone here have access to it? http://www.caixinglobal.com/2017-09-11/101143673.html

dgut• 9 years ago

What we need is a fully decentralised and uncontrollable Internet. It can't be wireless, that's too slow (limits of physics), and jamming it too easy. We need to actually dig our own cables, those are untraceable, and they'd have to cut one by one. OR we could probably leverage power lines, as much as I hate introducing noise into those. There is no 100% foolproof software solution given the current state of the net.

China to Shut Bitcoin Exchanges?

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