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Bitcoin Trading in China May See New Controls After Bitcoin Slide

Bitcoin Trading in China May See New Controls After Bitcoin Slide

Bitcoin Trading in China May See New Controls After Bitcoin Slide

​​China pretty much controls the global Bitcoin market, with about 80% of the world’s Bitcoin trading and about 95% of currency exchanges from fiat. This makes how China regulates, or doesn’t regulate, their domestic Bitcoin industry extremely important in the years to come. To this point, China has taken a laissefaire approach to the Chinese Bitcoin industry, but that may be ready to change in 2017. Slightly

According to the South China Morning Post, the Chinese authorities and People’s Bank of China are mulling whether to introduce third-party custodian services to oversee the world’s largest bitcoin market. This comes after the Bitcoin industry’s rapid national expansion and a recent sharp Bitcoin price fall that has highlighted the potential threat it poses to the stability of financial markets.

“Regulators have noticed that some bitcoin platforms crashed during the recent market volatilities, causing some investors, particularly those trading with leverage tools, to bear huge losses because they were unable to log on to the website during the sell-off,” the China Securities Journal reported on Tuesday.

In a perfect world, there may be a truly free market system where no one scams anyone in an investment, but China is not that world, and the raw volume of trading over the past twenty days has drawn a lot of attention in many influential circles. The Bitcoin industry in China has not been prone to theft, fraud or other maladies that used to plague the digital currency, but some tech issues may have been key to some investors taking a larger loss than was reasonable.

“The bitcoins were not stolen or hacked. Investors suffered loss as they were unable to trade, possibly because of the sudden price fluctuation and large sell offers. Introducing a third-party custodian for the investors would not reduce this risk,” said PwC China Fintech PartnerWilliam Gee, who said based on what happened in early January, the major risk with bitcoin arises from the trading infrastructure rather than the credibility of the trading platforms themselves.

Maybe individual investors contacted authorities for some level of intervention? Whatever the case may be, the PBOC and others are becoming more involved in the dealing of top Bitcoin exchanges, keeping dialogues open, and looking to make small adjustments into how business gets done.

As the market is not self-regulated at this moment, this may be a good approach. Leaders withing these large trading platforms are discussing making some ‘rules for the road’ when it comes to their trading practices in the near future, maybe to prevent a heavier hand from authorities.

“Regardless of the current position adopted by the regulators, recent market activities have certainly attracted their attention. Indeed, we have noticed more active engagement from the PBOC in this respect.” Chun Yin Cheung, another PwC China Fintech Partner, said.

“Although both mainland and Hong Kong financial regulators have made it quite clear that bitcoin is not a currency and thus not covered by the existing regulatory framework, the bitcoin-related behaviors are evolving and bearing the features of traditional financial market activities.”

Author : Evander Smart

Evander Smart worked for many years as a Wall Street banker, and has learned how the economy is self-destructing from the inside. His travels, experience and research have led him to Bitcoin as the best way forward for the common man. He looks to spread the word on how Bitcoin can help anyone break the shackles of economic slavery being created by global establishment forces. Evander gets you thinking about what money really is, and how it will work for you going forward. The world of finance is getting ready for incredible changes, and he is getting ready for what's coming next. Are you? Learn more about "The Future of Money" @ Bitcoin Video University

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