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China's OkCoin, Huobi exchanges to stop bitcoin withdrawals
February 10, 2017 / 6:08 AM / 7 months ago

China's OkCoin, Huobi exchanges to stop bitcoin withdrawals

SHANGHAI (Reuters) - Two of China’s three largest bitcoin exchanges said they were taking measures to stop withdrawals of the cryptocurrency from their platforms, as capital outflows prompt the Chinese central bank to step up its scrutiny of the industry.

OkCoin and Huobi said in statements published on their websites late on Thursday that they would halt withdrawals of bitcoins completely, while the other big exchange BTCC said it would subject withdrawals to a 72-hour review.

Earlier in the day, the exchanges had issued statements saying they would strengthen oversight of customers’ identities and sources of funds. They had also said they would upgrade their anti-money laundering systems, but that withdrawals of Chinese yuan would not be affected.

These measures come after China’s central bank said it called nine of the country’s smaller bitcoin exchanges in to a Wednesday meeting to discuss risks in the bitcoin market, and warned them they risked closure if they seriously violated regulations or took part in activities such as margin lending.

Bitcoin prices on European exchange Bitstamp were down 0.8 percent on Friday, trading at $975.61.

Beijing signaled it was keeping a closer eye on the bitcoin industry last month by launching checks into BTCC, Huobi and OkCoin, amid growing government efforts to stem capital outflows and relieve pressure on China’s currency, the yuan.

While the yuan weakened 6.6 percent against the dollar last year, its worst performance since 1994, the bitcoin price has soared to near-record highs.]

That, and the relative anonymity the digital currency offers, has prompted some to believe bitcoin has become an attractive option for tech-savvy Chinese to hedge against the yuan and skirt rules limiting how much foreign exchange individuals can buy each year.

BTCC, Huobi and OkCoin last month stopped margin lending and introduced trading fees after the People’s Bank of China (PBOC) launched checks into them.

In their Thursday statements, they also said they may freeze assets or limit trading by users who were found to flout rules. The statements contained links to documents published by China’s banking regulator warning investors about market risks.

News of meetings between the various exchanges and the PBOC, and other government agencies has caused the bitcoin price to swing wildly.

On Wednesday, the price fell from a one-month high after sources at bitcoin exchanges in China said the PBOC had summoned some exchanges to a closed-door meeting, before recovering all of those losses in U.S. and European time.

The PBOC said the nine exchanges involved in the Wednesday meeting were CHBTC, BtcTrade, HaoBTC, Yunbi, Yuanbao, BTC100, Jubi, BitBays and Dahonghuo. Industry insiders said the majority of these exchanges allowed other cryptocurrencies to be traded on their platforms besides bitcoin.

BtcTrade, Bitbays and BTC100 declined to comment on the meeting. Reuters was unable to immediately reach the other six platforms for comment.

The Chinese actions will ultimately be good for the industry, said Charles Hayter, Chief Executive Officer of London-based digital currency analytics firm Cryptocompare.

“The PBOC moves to regulate Bitcoin more stringently will bring short-term woes but will ultimately strengthen the ecosystem,” he said in a statement emailed to Reuters.

According to Hayter, trading between the Chinese yuan and bitcoin has fallen to around 26 percent of the bitcoin-fiat currency market from 98 percent at the start of the year.

Reporting by Brenda Goh; Additional Reporting by John Ruwitch and SHANGHAI Newsroom; Editing by Sam Holmes, Adrian Croft and Himani Sarkar

Our Standards:The Thomson Reuters Trust Principles.
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