Chinese Bitcoin exchange readies fallback plans amid crackdown worries

Bitcoin's popularity in China has taken a dive under the threat of new Chinese regulations

Once the largest Bitcoin exchange in the country, BTC China has seen better days. Trading volume on the site is down over 80 percent from its peak, and customers are fleeing amid rumors China is preparing a crackdown on the virtual currency, said the exchange's CEO Bobby Lee.

"People are scared, people are sitting on the sidelines," he said on Thursday. BTC China, though, is preparing fall back plans to keep the virtual currency in circulation even as local exchanges face a more hostile market.

Chinese Bitcoin exchanges have been on alert since media reports emerged claiming that China is readying another crackdown on the virtual currency. By April 15, Chinese banks will have to close the accounts used by the local exchanges to take funds from customers wanting bitcoins in return.

Gradually, more banks are shutting down services to local exchanges. On Thursday, another prominent exchange, called Huobi, reported that one of its banks has been forced to close its account by April 18. Huobi's accounts with other Chinese banks, however, remain in operation.

Although BTC China has yet to receive any formal notification of any bank account closures, the rumors have been enough to send customers packing, Lee said in an interview. Since December, when China first announced it would ban banks from trading in bitcoins, the virtual currency's price has fallen from 7000 yuan (US$1,136) to 2487 yuan.

"The people who are actively trading are few and far between," he said. "Certainly, the mainstream audience, if they ever get back in, is sitting on the sidelines."

Fans of new technology make up most of the remaining investors. But despite the beating BTC China has taken from today's market, the exchange is optimistic it can remain viable, Lee said. He pointed to recent statements from China's central bank that, while authorities believe bitcoins should not be treated as a currency, consumers are still free to buy and sell them.

"So there's no doubt in my mind that these activities are legal and allowed," he said. "It's just about what hoops you have to jump through to conduct these activities."

BTC China is also coming up with legal "workarounds" to get bitcoins in the hands of wanting customers, he said. Shutting down the bank accounts would mean customers could no longer wire money to the local exchanges, although they could still buy bitcoins with cash, Lee said.

Lee declined to offer more details on how local exchanges might end up taking customer deposits in the future. However, some exchanges are experimenting with methods revolving around customer's personal debit cards. The exchanges could also conceivably sell pre-paid cards filled with bitcoins that are then delivered to customer's doorsteps, he added.

For China's Bitcoin market, "It's a cooling off period," he said, adding, "We are still very excited. Everything will have ups and downs."

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags governmentregulationinternetfinancee-commerceindustry verticalsBTC China

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Michael Kan

IDG News Service
Show Comments

Cool Tech

Toys for Boys

Family Friendly

Stocking Stuffer

SmartLens - Clip on Phone Camera Lens Set of 3

Learn more >

Christmas Gift Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Cathy Giles

Brother MFC-L8900CDW

The Brother MFC-L8900CDW is an absolute stand out. I struggle to fault it.

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?