Digital Currencies Fall on China News – Trustnodes

Digital Currencies Fall on China News


Most digital currencies faced a steep decline today following further comments by PBoC and an extension by major Chinese exchanges of a halt on deposit and withdrawals of digital currencies.

Bitcoin’s price fell by around $100 during China’s morning time as Zhou Xuedong, director of PBoC’s business management department – which is currently undertaking an investigation on major bitcoin exchanges – stated that in the short term the exchanges need to be kept “under strict supervision.”

Xuedong further stated that regulators will take a “forgiving attitude” towards exchanges, suggesting a blank state approach towards any transgressions prior to the establishment of a new “blacklist.”

Xuedong stated that from now on exchanges cannot offer margins and leverage trades, produce fake volumes, violate AML laws or regulations on foreign currency management, replace fiat by using bitcoin to purchase goods, provide financial services without license, allow tax evasion, false advertising or participation in ponzi schemes.

Much of the above was to be expected at a minimum and some may find it as a relief considering the many other options PBoC had, but the extension on a suspension of withdrawals is surprising if not shocking.

Last month major Chinese exchanges announced a temporary halt of digital currency withdrawals, such as bitcoin and ethereum, to update their platform so as to comply with new PBoC regulations. They estimated a resumption of normal service would take around one month, if not earlier, but now, they are saying there will be no such resumption unless PBoC gives a clearing.

The open-ended nature of this decision necessarily increases short term uncertainty especially considering the snail speed actions of bureaucracy. Markets, therefore, have reacted to price in any potential further delays.

However, the western hemisphere is far more focused on the now imminent decision regarding the first ever digital currency ETF. COIN, by the Winklevoss twins, has just two days left for approval or rejection. If no decision, then it is approved by default.

Usually, if an ETF is to be rejected the proposer is invited to withdraw the application to allow for a modified re-application. Last minute decisions for a rejection are extremely rare.

As such, the bear attitude coming from China appears to be balanced by the bullish attitude from the western hemisphere. For the past two days there have been $100 sell offs during China’s morning time, but in each instance they quickly recovered with some analysts suggesting an ETF approval may send the price to stratospheric heights.

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