PBOC Meets With Leading Chinese Bitcoin Exchanges Amid Price Volatility
The People’s Bank of China (PBOC) initiated meetings this week with leading bitcoin exchanges in both Beijing and Shanghai. PBOC representatives in Beijing met with OKCoin and Huobi while PBOC representatives in Shanghai met with BTCC.
On the evening of Friday, January 6 in China, the PBOC offices in Beijing and Shanghai both issued statements on the meetings, noting that the “recent bitcoin price is highly volatile” and that the bank encourages the exchanges to “operate strictly in accordance with the laws and regulations of China and to conduct self-examination based on related laws and correct any possible irregularities.”
The statements also urged citizens to “invest with rationale in bitcoin and thus bear the possible risks on their own.”
The PBOC’s full statements can be found below.
Huobi, OKCoin and BTCC account for 90 percent of Bitcoin’s global trading volume and saw prices near historical highs in the past 36 hours before they fell dramatically.
Zhu Jiawei, COO of Huobi, confirmed with Bitcoin Magazine that the exchange met with the PBOC and gave the following statement:
“Huobi will conduct strict self inspection according to requirements from PBOC and other authorities, and laws and regulations. Huobi also plans to establish an industry association with other companies to promote self discipline, and the formation of industry standards.”
Jiawei added the warning that “investors should control the risk because bitcoin is an investment product with high risk, traded 24/7 and without limitation on the value fluctuation.”
BTCC also confirmed meeting with the PBOC and issued the following statement:
“BTCC regularly meets with the PBOC and we work closely with them to ensure that we are operating in accordance with the laws and regulations of China. As the longest running exchange in the world, we have always adhered to strict AML/KYC policies and continue to be compliant with all current regulations in China. The press release put forth from the PBOC today outlines that there is significant volatility in bitcoin trading, and also quoted from a notice released in 2013 saying that bitcoin is a virtual good and doesn’t have legal tender status. All of our users should be aware of the current policies on virtual goods as well as the risks involved in trading in volatile markets.”
OKCoin has not yet responded to requests for comment from Bitcoin Magazine.
The PBOC has been meeting with exchanges on a semi-regular basis in recent months. However, the timing of these meetings and the nature of the statements suggest that they were a direct result of recent dramatic price movement.
China’s financial markets have a long history of government involvement and intervention. The fact that the PBOC is making public statements about bitcoin and reaffirming its own commitment to ensuring the operational integrity of exchanges in the country could be interpreted as a recognition of bitcoin’s increasing viability.
From the trading perspective of bitcoin’s price movement and the PBOC’s statement, BitMex’s Arthur Hayes commented, “The PBOC didn’t say anything new. They crushed CNH shorts and BTC longs this year. The trade is clear: short CNH or CNY and buy bitcoin.”
Interestingly, the price of bitcoin cratered just as it reached 8,888 CNY. Eight is regarded as the luckiest number in Chinese culture and appears to have been a profit-taking point for many investors.
The recent bitcoin price is highly volatile. To prevent risks and uphold financial stability, PBOC Shanghai and Financial Office of Shanghai have jointly met the major heads of BTCC to know the current status of Bitcoin trading. “We have reminded BTCC of the possible risks and require it to operate strictly in accordance with the laws and regulations of China. We have urged BTCC to conduct self-examination based on the related laws and correct any possible irregularities.”
In accordance with the Joint Notice of Bitcoin Risk Prevention by the People’s Bank of China, Ministry of Industry and Information, China Securities Regulatory Commission China Banking Regulatory Commission, China Insurance Regulatory Commission, bitcoin is a specific virtual good. It is not law-based and compulsory like currency and thus does not have legal status as a currency. It should not and shall not be circulated as a currency in the market. Individuals and institutions should treat virtual goods and virtual currency properly. They should invest with rationale, bear the possible risks on their own, uphold their own assets and have a correct understanding and concept of currency.
Statement from BPOC Beijing:
The recent bitcoin price is highly volatile. To prevent risks and uphold financial stability, PBOC Beijing and Financial Office of Beijing have jointly met with the major heads of OKCoin and Huobi to know the current status of Bitcoin trading. We have reminded BTCC the possible risks and require it to operate strictly in accordance with the laws and regulations of China. We have urged BTCC to conduct self-examination based on the related laws and correct any possible irregularities.
In accordance with the Joint Notice if Bitcoin Risk Prevention by the People’s Bank of China, Ministry of Industry and Information, China Securities Regulatory Commission China Banking Regulatory Commission, China Insurance Regulatory Commission, bitcoin is a virtual good. It is not law-based and compulsory like currency, and thus does not have legal status as a currency. It should not and shall not be circulated as a currency in the market. Individuals and institutions should properly treat virtual goods and virtual currency. They should invest with rationale in bitcoin and thus bear the possible risks on their own.
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