Bitcoin Working in China
While the digital cryptocurrency Bitcoins dominated the business world in 2017 in almost all the big countries, China, the home to largest Bitcoin mining community decided to voice dissatisfaction over the market measures and restricted the bitcoin trading on domestic exchange to counter the financial risks.
From putting a stop to the virtual currency on domestic exchange to the complete ban on the International cryptocurrency exchange, Chinese regulators have been proactive in shaping the Bitcoin rise and fall globally. After a massive economic success in past few years in everything from business to real estate market, China, the country once responsible for its dominance in the cryptocurrency world is finally closing its door for domestic as well as international Bitcoin exchange platforms.
In 2017 after conducting significant investigations at BTC China, OkCoin, and HoBi, three largest bitcoin exchanges in Shanghai and Beijing the central bank of China accused them of lack of risk controls. The bank issued an early warning to investors following which exchanges started to upgrade their security system which further led to temporary suspension of Bitcoin withdrawals.
At first, China decided to ban initial coin offering for new digital currencies followed by putting a stop on Bitcoin trading on local exchanges to discourage the Bitcoin mining. But now officials have also decided to block mobile apps and online platforms offering International exchange services for Bitcoins and peer cryptocurrencies by great firewall. The process is a combined effort of Central bank, China’s Ministry of Information Technology and the cyberspace administration.
Even though there has been no specific explanation from the officials, the cleansing risk in the financial market is supposedly the core mantra of the Chinese government. The major concerns include the increase in shadow banking area and unregulated loan sources. Bitcoins also provide a potential way to outflow your money from China that had the government take immediate steps. Chief economist, Mark McFarland at Union Bancaire, Hong Kong said a stronger and longer-term solution for tightening scrutiny of activities that aren’t in the normal sort of monetary realm is required.”
Probably. China has run its very own trail prototype cryptocurrency at People’s Bank of China taking a step further to being world’s first major bank to issue its own digital currency. China’s long-term vision seems to revolve around taking complete control of such transaction than to libertarian goals of Bitcoin.
China’s moves are reshaping the mining industry and also driving up the overall cost. Though Bitcoin is still being traded over the counter markets, but the process is comparatively slower with increased credit risk as reported by some analysts.
Bit-miners initially moved to China because of the local chipmaking firms, inexpensive power, and cheap workforce but they are looking elsewhere. The China biggest Bitcoin mining collectives are run by Bitmain which is now setting up regional headquarters in other countries like Singapore and mining headquarters in Canada and US. BTC.Top, another top mining pool is moving its operations to Canada.
Though Bitcoin is still being traded over the counter markets, but the process is comparatively slower with increased credit risk as reported by some analysts. But China’s move to stop Bitcoin trading completely has got many wallet services, Bitcoin exchanges to leave and set up counter markets in Singapore, South Korea, and Hong Kong.
Initially, the price seemed to be unaffected by the news of Chinese regulation. But reports predict that the tide of rising regulations has led to weigh down on digital currencies explaining the losses from the beginning of 2018. China has been the home to the biggest crypto mining operations for Bitcoins and other digital currencies.
The growing popularity of Bitcoin may have stirred the government to perceive it as a possible threat to their national currency, especially after investors bought the bitcoin against the yuan bet in 2017. The Bitcoin reputation has also taken a toll on all major industries including online gambling, technology, and business in China.
To prevent financial risks, the country will take additional measures to eliminate any offshore or onshore platforms related to Bitcoins. This will lead to investors turning to overseas platforms to participate in Bitcoin transactions where risks are still actively fueled by fraud, illegal issuance and unreliable pyramid selling.