Chinese media reports that two of the country’s biggest exchanges, Huobi and OKCoin, have been allowed to continue operating until the end of October.
Reports suggest after October they have to shut down, but that is unclear at this stage as the “specific program is still under study,” according to a rough translation of Sina.
The CEO of Huobi and OKCoin were rumored to be meeting with regulators today which somewhat hinted at a more lenient treatment for the two exchanges.
It is unclear what exactly was discussed. Media reports they were allowed to continue because they engaged in no ICO or tokens trading and because they are the largest with much volume, but the real reason for this more lenient treatment is unclear.
The highest political event in the country, a five-yearly congress of the ruling Communist Party, is to take place on October 18th this year.
The delay of a complete shut-down until after that date might suggest a potential u-turn is still on the table as the outcome of the Congress may give whoever comes on top a stronger hand.
There appears to be some sort of power struggle as well as an ideological struggle in the country. China has to decide whether to deepen its free market reforms, or cling to outdated communist ideology.
Bitcoin, therefore, might be some sort of proxy in that game, but much of this is speculation, with China’s authoritarian government having not yet made any public statement on the closing of some exchanges.
It may well be the case their aim is simply to keep bitcoin down. If it is small, they may be fine with it, but if it grows considerably, then PBoC would not be free to devalue its currency as it pleases and gain in a zero sum game at the expense of other nations.
So perhaps they’ll keep OKCoin and Huobi to give bitcoin another blow if it rises despite the best efforts of PBoC.
But, if they were smart, they could just limit the amount of bitcoin their citizens buy in line with their foreign exchange control rules, rather than driving it underground where it would probably flourish at the same time as they turn an entire generation against the country.
So we’ll have to wait and see what the unaccountable authoritarian government decides in October. With the China drama continuing.