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Bitcoin In China. This Is The End, My Beautiful Friend, The End….

Posted in China Business, Legal News

With apologies to the Doors.

No way was China going to allow Bitcoin to thrive in China. No way.  China likes to control its capital inflows and outflows, probably more now than a few years ago.  It does not like hot foreign money coming in to buy Chinese real estate because it does not want its real estate to keep rising beyond the reach of its masses.  And it does not like money flowing out for a whole host of reasons.  I always figured Bitcoin would be too hard for the government to monitor.

On top of that, China has a long history (dating back mostly all of thirty years or so) of its people jumping on the next big thing in investments/scams, and then losing boatloads of money.  No government likes that.

So again, no surprise when it was reported today in Bitcoin price halves as China clampdown escalates that China is essentially cutting off Bitcoin in China, slowly but surely.  According to the article, China has instructed various third party payment services to cease dealing with Bitcoin by the end of January:

China’s central bank has ordered third-party payment agencies — which provide clearing services for bitcoin exchanges — to stop any “custody, trading and other services” related to the virtual currency, according to a report Tuesday by Yicai.com. The Chinese website — which is affiliated with the China Business Network TV station – added that platforms were told to end working relationships with virtual currency exchanges before Chinese New Year which commences at the end of January.

Zhou Jinhuang, the deputy director of payment clearance at the People’s Bank of China is reported to have chaired the closed-door meeting on Monday when more than 10 third-party payment platforms were given the news. Attendees included a representative from Alipay, which is China’s leading third-party online payment solution, according to its website.

According to the article, “BTC China, the world’s largest bitcoin exchange, according to Bitcoinity.org, stopped accepting deposits in Chinese yuan on Wednesday due to the clampdown.”  This occurred on December 18, after BTC China “received notice” from its third-party payment processor.

Bobby Lee, CEO of BTC China had this to say:

“They essentially have cut us off from allowing customer deposits into BTC China’s bitcoin exchange,” he said. “Customers don’t have to worry, the deposits are still here, the withdrawals will still be allowed. So there’s no need to panic on that.”

Lee added that he believes the recent clampdown is not due to government officials in the country fearing that bitcoin is helping customers to move yuan out of China. “Bitcoin exchanges are legal…so our business model is still valid but we’re under some pressure in terms of being able to work with third-party payment companies. So we’re looking for alternatives,” he said.

Whoa.  First off, I do think that this “clampdown” is due to government officials being concerned about capital outflows, but be that as it may.  The part I really question is his statement that BTC China’s “business model is still valid” and that they are “looking for alternatives.”  The reason I question that is that I cannot even imagine what those alternatives would be and I cannot even imagine if they were able to find “alternatives” that the Chinese government wouldn’t have a talk with those alternatives as well.

The way I see it, this is the end of Bitcoin in China.

What do you think?

  • http://blogs.forbes.com/jonmatonis/ Jon Matonis

    It’s unfortunate that their government has chosen to push Bitcoin underground in China.

  • C101

    China did the right thing, unlike the rest of the idiot nations who are falling for the BTC trap.

  • http://chinastockwatch.wordpress.com/ Mike Cormack

    Bobby Lee is clearly partial, and I don’t see any way back for bitcoin in China. The government simply won’t have it, for the reasons you rightly point out, and also because they can’t control it.

  • http://thaiexports.tk/ Frankie Bishop

    The extreme a country can go is to ban all connections to BitCoin with Nation State currency. The majority of mining gear comes from there – They should be aggressively mining, utilizing, spreading adoption of BitCoin and other crypto-currencies to decrease control by Nation State.