Over the past week, bitcoiners everywhere have been focused on the speculative news of China ‘banning’ bitcoin and wondering if the stories were true. According to recent reports from local media and the country’s National Internet Finance Association (NIFA), bitcoin is not ‘illegal,’ but exchanges may face tighter regulatory supervision and might have to cease operations temporarily until they are licensed.
Also read: Professor Urges New Zealand Government to Develop Bitcoin Regulations
Bitcoin Exchanges May be Required to Procure a License
Last week new.Bitcoin.com reported on rumors of China banning bitcoin, while cryptocurrency markets tumbled due to the negative news. Many reports from mainstream media detailed that the digital currency was deemed ‘illegal’ in China, even though there was no confirmation of this from regulatory officials. Bitcoin proponents also saw tweets from Litecoin creator, Charlie Lee, stating that China “finally banned bitcoin exchanges,” but the tweet was later deleted.
Later Bitmain’s Jihan Wu explained to his Twitter followers that “China has not banned bitcoin.” Further Mr. Wu detailed that exchanges needed licensure and the same thing would happen in the U.S. if trading platforms didn’t have a license.
“None of the bitcoin exchanges in China have licenses that are required for order book exchange,” explains Mr. Wu via Twitter. “Such law is older than bitcoin. Because some establish in China that Bitcoin exchanges need to stop operations right now does not mean that they cannot open again once with a license.”
If a bitcoin exchange operates inside U.S. without a license for years and later is asked to stop operating. Is the U.S banning bitcoin?
So-Called “Currency” Trading Platforms Are Not Legally Established
Following the rumors and hearsay, China’s National Internet Finance Association (NIFA) announced that exchanges dealing with cryptocurrency and ICOs had received many warnings in the past. NIFA states that any exchange operating in China currently has “no legal” authority to operate a virtual currency business at the moment.
“So-called “currency” trading platforms in China are not legally established,” reveals NIFA’s statement on September 13.
China’s regional media sources also confirm that exchanges will face stricter regulatory scrutiny, but claim that bitcoin is not banned nationwide. According to the reports, the next step will be strengthening cryptocurrency exchange supervision while also emphasizing that ICOs are still forbidden. One report explains regulators are merely “removing fraudulent projects without actual content.” However, even though some local reports state bitcoin exchanges will face more regulatory challenges they still may have to cease operations in the meantime.
The Possibility of Cryptocurrency Exchanges Shutting Down is Still There
An anonymous source told The Wall Street Journal that domestic cryptocurrency trading platforms will soon be closed down. The sources explained that regulatory officials were cryptic detailing the situation and would not reveal when the alleged exchange shut down would happen. “Too much disorder was naturally a basic reason” to stop cryptocurrency operations explained the news outlets’ source.
For now, every major Chinese cryptocurrency exchange is still operating, and the public doesn’t know if they will have to close down. Moreover, if exchanges are asked to close, then the trading platforms may have to get licensed before resuming financial operations. Many speculators believe the news has been the primary factor tied to the bitcoin price drop over the past 24-hours.
What do you think about the recent events in China? Do you think Chinese exchanges will be shut down? Let us know in the comments below.
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