Big China bitcoin exchange says no government pressure on
outflows
The head of a major bitcoin exchange in China says few people
there use the cryptocurrency to get around rules on how much money they can
take out of the country, and despite a publicized meeting with the central bank
last week the exchange, BTCC, hasn't been told explicitly to check capital
outflows.Bitcoin's price took a steep dive on Friday after
China's central bank cautioned investors to take a rational and careful
approach to investing in the digital currency. The price had surged to record
highs.The central bank's comments come as Beijing escalates a campaign
to check capital outflows and slow the depreciation of the yuan currency CNY=CFXS, which lost nearly 7 percent of its
value against the U.S. dollar last year.With bitcoin's soaring price and the relative anonymity it
affords, some believe the digital currency was becoming an attractive option
for tech-savvy Chinese to hedge against the yuan and circumvent rules that
limit individuals to $50,000 of foreign exchange each year.The Shanghai office of the People's Bank of China (PBOC) said
on Friday it had met with BTCC to understand the platform's operations,
highlight the risks, remind the exchange to abide by the law, and "urge
the platform to carry out self-examination and corresponding clean-up and
rectification" according to law.Asked if BTCC had received direct pressure on outflows, CEO
Bobby Lee, who founded BTCC in 2011, said: "No. Not as of yet... Nothing
verbal or written to us."In Beijing, the PBOC told two of China's other big bitcoin
exchanges, Huobi and OKCoin, not to mention the depreciating yuan when
advertising their platforms, the influential news outlet Caixin said, citing
people familiar with the meeting.Star Xu, CEO and founder of OKCoin, confirmed there had been
a meeting of the PBOC and leading bitcoin exchanges on Friday to discuss the
operation of trading platforms."The industry can benefit from balanced, risk-based
regulation and/or oversight, and we look forward to further constructive
discussions with the regulators and industry participants," Xu told
Reuters in an emailed comment.While it's possible to buy bitcoin with yuan and then sell it
abroad for a foreign currency, BTCC's Lee said "to be honest, not
many" people were doing it because of the cost.The renminbi price of bitcoin carries a premium to the price
in other currencies, he noted. In addition, buy or sell orders in the 100,000
yuan ($14,423) to 1 million yuan ($144,233) range, and up, would influence the
bitcoin spot price and affect the transaction."For that range, you're not going to be able to do it
at a good rate. You're going to lose 10 percent of your money," Lee said.
"Maybe the individual household might buy 20,000 more dollars worth of
bitcoin than their $50,000 (forex) quota, but that's a drop in the
bucket."Still, Lee said various indicators, like active trading
accounts, new users, actual deposits and withdrawals, were "very
active" in China, and some key BTCC metrics were at "all-time
highs", though he declined to be more specific.
NOT LEGAL TENDER
Bitcoin is not regulated in China, but the PBOC has
declared it is not legal tender, and is instead a "virtual good", Lee
said. That puts it in the same category as other goods."If I pack a suitcase and take a plane to the United
States, do the clothes, does the computer in my suitcase, does the watch I wear
count towards capital flight?" he said. "Where do you draw the
line?"He said no new or planned rules regarding bitcoin were discussed
in the latest meeting with the PBOC, and he estimates it will be two to three
years before China regulates bitcoin.In a statement on its website, BTCC, which calls itself the
world's longest running bitcoin exchange, said it regularly meets with the PBOC
and "work(s) closely with them to ensure that we are operating in
accordance with the laws and regulations of China."Exchanges in China say they account for more than 90 percent of
global bitcoin trading, which would help explain why a shift in Chinese demand
would sharply affect the price.But many bitcoin experts say Chinese exchanges overstate their
volumes in the digital currency, and attribute sharp moves to speculation by,
for example, U.S.-based hedge funds.(Reporting by John Ruwitch; Editing by Ian Geoghegan)
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