[China has sought to walk a tightrope when it comes to Bitcoin and similar virtual currencies. Whereas the currencies provide the country with a chance to develop new and emerging technologies, officials also worry that they would allow Chinese consumers to get around tough restrictions on how much money they can send overseas and allow them to be used to launder money.]
By Cao Li
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An
employee at the Bitmain farm that “mines” for Bitcoin. Chinese regulators have
said
they will halt exchange-based trading in the virtual currency.
Credit
Giulia Marchi for The New York Times
|
BEIJING — A major Chinese exchange
specializing in the trading of Bitcoin announced on Thursday that it would stop
trading by the end of the month, amid a broader crackdown against virtual
currencies by the authorities in Beijing.
The announcement by BTC China, the country’s
first and largest digital currency exchange, came days after the Chinese
authorities banned fund-raising for new digital currencies, and amid worries
that regulators would tighten rules surrounding currencies like Bitcoin.
The exchange’s decision is the first of its
kind in China, and it raises the specter of other exchanges shutting down
Bitcoin trading in the future.
China has sought to walk a tightrope when it
comes to Bitcoin and similar virtual currencies. Whereas the currencies provide
the country with a chance to develop new and emerging technologies, officials
also worry that they would allow Chinese consumers to get around tough
restrictions on how much money they can send overseas and allow them to be used
to launder money.
Still, the impending closing of BTC China’s
online currency trading operations is a blow to the country’s aspirations to
lead the way in the sector. Some two-thirds of all Bitcoin issued daily is
“mined” in China, and an array of other companies benefit from such efforts,
including equipment suppliers and construction firms that build enormous
Bitcoin farms.
“It’s a sad day for the Bitcoin community
here in China,” said Wei-Tek Tsai, the director of the Digital Society and
Blockchain Laboratory at Beijing’s Beihang University.
In a statement published on the messaging
platform WeChat, BTC China said it would “stop all trading on September 30.” It
said the move was in response to a decision this month by Chinese regulators to
ban so-called initial coin offerings, in which new digital currencies seek to
raise funds.
The price of Bitcoin dropped more than 10
percent on Thursday, to around $3,500, in the hours after the announcement.
Bitcoin is increasingly in the spotlight
around the world. Its proponents — a group that includes tech enthusiasts,
civil libertarians, hackers and criminals — cheer the fact that it can be sent
across borders anonymously and that it is not regulated by a central authority
like a typical currency.
China has emerged as the leading force in
Bitcoin trading in recent years. But as the virtual currency’s profile has
risen in the country, Chinese regulators have increasingly sought to control
how it is traded and used. When they stepped up their oversight of Bitcoin
trading this year, it led to a rapid and substantial drop in trading volumes.
“Because it is traded anonymously and peer to
peer, Bitcoin makes it easy for money laundering and tax evasion,” said Sheng
Songcheng, an adviser to the People’s Bank of China, the country’s central
bank.
Official Chinese news media has cited
officials as saying they want to close Bitcoin exchanges — a move that
precipitated Thursday’s decision by BTC China — though they have not set a time
frame.
China Business Network, a financial and
business news portal, said on Thursday that the authorities in Shanghai, where
BTC China is registered, would close all Bitcoin exchanges within their
jurisdiction by the end of the month; and the report piled on further uncertainty.
Though the moves by the Chinese authorities
this month have resulted in declines in the value of Bitcoin, some argue that
they will allow for a more even geographic distribution in the online
currency’s trading and mining.
“The overall share of Chinese exchanges has
been diminishing steadily,” said Thomas Glucksmann, marketing manager for the
Hong Kong-based Bitcoin exchange Gatecoin. Mr. Glucksmann said that much of the
Bitcoin community had been concerned about the increased level of scrutiny in
China and had been moving their assets out of the country.
“People will realize that China is out of the
picture for the moment,” he said.
Amie Tsang contributed reporting from London.
