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China's Central Bank Launches Spot Checks on Bitcoin Exchanges

Image: China's Central Bank Launches Spot Checks on Bitcoin Exchanges

Wednesday, 11 Jan 2017 07:28 AM

China's central bank said on Wednesday it launched spot checks on major bitcoin exchanges in Beijing and Shanghai, knocking the price of the cryptocurrency down by more than 6 percent.

The probe of bitcoin exchanges, including BTCC, Huobi and OKCoin, was to look into a range of possible rule violations, including market manipulation, money laundering and unauthorized financing, the People's Bank of China (PBOC) said. It did not say if any violations had been found.

On the Europe-based Bitstamp exchange, the bitcoin price fell as much as 7 percent. By 1030 GMT, it traded down around 4 percent. On Huobi's website, the price quoted in yuan slid nearly 10 percent before pulling back to trade about 6 percent lower.

Chinese authorities have been ratcheting up efforts to stop capital outflows and relieve pressure on the yuan to depreciate. The currency lost more than 6.5 percent against the U.S. dollar last year.

With bitcoin's soaring price and the relative anonymity it affords, some believe the digital currency has become an attractive option for tech-savvy Chinese to hedge against the yuan and circumvent rules that limit the amount of foreign exchange individuals can buy each year.

The Shanghai arm of the PBOC said it visited BTCC on Wednesday.

"The checks focused on whether the firm was operating out of its business scope, whether it was launching unauthorized financing, payment, forex business or other related businesses, whether it was involved in market manipulation, anti-money laundering or (carried) fund security risks," it said.

In a separate statement, the PBOC in Beijing, where officers visited the offices of OKCoin and Huobi, said "the spot checks were focused on how the exchanges implement policies including forex management and anti-money laundering."

Shanghai-based BTCC's CEO Bobby Lee confirmed the visit, but said he believed the company was not out of line.

"We're definitely vigilant. We think we are in compliance with all the current rules and regulations of running a bitcoin exchange in China," he told Reuters by phone.

"I wouldn't call it an investigation. I think they are working closely with us to learn more about our business model and the bitcoin exchange industry. We had a very fruitful meeting today," Lee said.

A Huobi executive who declined to be named confirmed the PBOC visited their office on Wednesday, but declined to provide details. A spokeswoman for OKCoin told Reuters its platform was operating normally, and it was working with the authorities.

Last week, PBOC officials meet with the three exchanges, and the central bank publicly urged investors to take a rational and cautious approach to investing in bitcoin.

© 2017 Thomson/Reuters. All rights reserved.

 
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China's central bank said on Wednesday it launched spot checks on major bitcoin exchanges in Beijing and Shanghai, knocking the price of the cryptocurrency down by more than 6 percent.The probe of bitcoin exchanges, including BTCC, Huobi and OKCoin, was to look into a range...
china, central bank, bitcoin, exchange
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2017-28-11
Wednesday, 11 Jan 2017 07:28 AM
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