Continue: Inquiry is Normal and Exchanges Will Firmly Help Guard against Risk
The inquiry launched by the People’s Bank of China into BTCC, OKcoin and Huobi Bitcoin exchanges on Friday January 6 may be a catalyst for some retracement – a temporary reversal in the direction of a price that goes against the prevailing trend – in the market, said Dominik Weil of Bitcoin Vietnam.
While it is being misconstrued for a ban by some media, the meeting neither mentioned a ban on Bitcoin-related trading nor any other form of restrictive measure on Bitcoin trading itself.
The meeting with the three exchanges that account for 90% of the global Bitcoin trading was meant to remind the exchanges of their need to operate in accordance with the laws and regulations of China and to conduct self-examination. It comes after the price of Bitcoin recorded a wild volatility in a couple of days.
Chinese government’s policy and behaviors are always subtle and important. The “inquiry” in Chinese literally means “to meet and talk”( yue tan 约谈). In Chinese Stock Exchanges, CEO of companies whose stock price is abnormally volatile or whose capital operation has potential to greatly impact the market like major acquisition and buy-out could be inquired by China Securities Regulatory Commission. The inquiry in many cases is just a softened reminding or if any, warning. It can also be the initial stage of an investigation in some cases, though.
According to Caixin, China’s top financial news media, PBOC has told the threes exchanges that the devaluation of yuan should not be mentioned in their promotions and has reiterated the importance of Anti-money Laundering Law of China. Furthermore, PBOC said the three exchanges should not conduct off-line promotions in China. Specifically, PBOC has warned BTCC that fake trading records(machine transactions) shall not happen again.
In a short statement from BTCC regarding the announcement, the Chinese exchange which touts itself as the longest running in the world, notes that the meeting with the PBOC was not the first of its kind and that the press release issued only outlines the significant volatility in Bitcoin trading and a reminder that the digital currency does not have a legal tender status.
In the announcement of BTCC, it reads:
BTCC has participated the meet-up with PBOC and Financial Office of Shanghai. It has introduced the current status of BTCC. BTCC will operate strictly in accordance with Chinese laws and regulations as it has long been done. BTCC will actively conduct self-examination and correction of any irregularity. BTCC will firmly help government to uphold market stability and guard interests of investors. BTCC’s reminder:In accordance of Joint Notice of People’s bank of China, Ministry of Industry and Information, China Securities Regulatory Commission China Banking Regulatory Commission on Bitcoin Risk Prevention, Bitcoin is a specific virtual goods. It is not law-based and compulsory like currency thus does not have the legal status as a currency. It shall not, should not be circulated as a currency in the market. Individuals and agencies should properly treat virtual goods and virtual currency. They should invest with rationale in Bitcoin and thus bear the possible risks by their own.
Some people think the inquiry should not be overstated and over interpreted.
In an email to 8btc, Weil says :
“the news is probably more like a a catalyst for some retracement(cooldown) of an overheated market anyway. The price surges we have seen over the last 2 weeks have been quite exaggerated. We might see now some days/weeks of a more stable price development,” he stated. We are also in regular exchange with officials of the State Bank of Vietnam in order to bring our industry insights to the table while making sure we are in compliance with all applicable laws and regulations. I think this is just the natural state of things if you are serious about building a long-term perspective for your business.”
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