The price of Bitcoin has fallen sharply today after the Chinese central bank confirmed rumours that it is investigating the operations of China’s bitcoin exchanges – the world’s largest. From a level of about $910 earlier it has dropped to levels now around $790.
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BTCC, Huobi and OKCoin appear to be unfazed by this and are functioning as normal.
BTCC Twitter Screenshot
People’s Bank of China has announced today (link in Chinese to PBOC website) that its Shanghai headquarters, the Shanghai Municipal Finance Office, and other government bodies are to form a joint inspection team on Bitcoin in China. It will carry out on-site inspections at Bitcoin exchanges, focusing on checking whether they go beyond the authorised scope of the market, whether or not they have a license to carry out credit, payment, exchange and other related business; as well as whether there is any market manipulation, anti-money laundering (AML) system implementation, financial security risks and so on.
CryptoCompare.com chart which shows the premia on CNY exchanges over the past two months and how it is turning to a discount and leading the market lower.
Charles Hayter, the CEO of CryptoCompare.com, comments: “This is a ratcheting of the rhetoric from the Chinese Authorities – instead of “we’re watching” you it’s now “we’re investigating” you.
The intentions of the Chinese state are clearer and it looks like they’re trying to bring the Chinese Bitcoin exchanges to heel – whether they are looking to make an example is yet to be seen.
The long term implications of this move are positive as more rigour in the Chinese market only matures and brings respectability to the industry – but in the short term this could affect volumes which have been one of the key drivers of the recent rally.
At present the CNY market sit at a discount of $10 from the USD price. The recent market has been led with the Chinese pairs trading at a premium of up to $100 dollars so this is a significant reversal of the key trend.”