China’s Central Bank is Inspecting Bitcoin Operators, Bitcoin Price is Tumbling
In a surprise announcement, China’s central bank announces ‘on-site inspections’ on Bitcoin enterprises in the country, causing further Bitcoin price uncertainty.
In a statement released by the People’s Bank of China, the central bank of China has announced that they are going to be carrying out inspections on Bitcoin enterprises in the country. The statement was posted in Mandarin on Jan. 11, 2017 on the PBOC website.
Sudden ‘inspections’ on Chinese Bitcoin companies
The PBOC will check by carrying out onsite inspections if the Bitcoin enterprises within China are operating under the regulations of the country.
The central bank is on the lookout for companies that they deem to be operating “beyond the scope of the enterprise and the market.”
PBOC is also going to be checking licenses and if the companies are actually allowed to carry out credit, payment, exchange and other related businesses.
A more worrying aspect of these ‘raids’ would be that the PBOC is going to hunt down anyone that they believe is manipulating the market. Compliance with anti-money laundering system implementation and financial security risks is also on the agenda.
BTCC: Inspection, not raid
BTCC has released this comment on Chinese social media platform Weibo:
"The afternoon of January 11, 2017, the Shanghai headquarters of the People's Bank of China, Shanghai Finance Office and other units to carry out on-site inspection of Bitcoin China.
At present Bitcoin China is running normally, is actively cooperate with the regulatory department of inspection, and in accordance with laws and regulations to provide information, if received specific guidance, we will notify the user the first time.
Bitcoin China promises that we will, as always, strictly comply with the relevant laws and regulations and regulatory requirements, compliance business; maintenance Bitcoin market stability, and resolutely protect the interests of investors."
Is China tightening the screws?
Bloomberg had reported on Jan. 9, 2016 that there are rising concerns that China is increasing pressure on Bitcoin companies to curb capital outflows. Bloomberg had quoted QQ.com as saying:
“The People’s Bank of China’s Shanghai branch said in a statement late Friday that its officials, along with the city’s financial office, asked Bitcoin trading platform BTCChina.com to conduct self-checks and rectify any problems. The State Administration of Foreign Exchange has scrutinized some major bitcoin exchanges, possibly to investigate the use of the digital asset to evade capital controls.”
Follow up action?
The inspections, raids or scrutiny on-site of Bitcoin operators in China could be termed as a follow-up action after the PBOC had called in companies like BTCChina.com, OKCoin and Huobi.
We had reported earlier that the Renminbi had been under considerable pressure and the Chinese have been taking measures against capital flight. We have no certainty of saying as of this moment if these actions by the Chinese central bank are merely a follow-up of their earlier warning to companies that had advised a course of self-correction or if they signal a shift in the thinking on Bitcoin viz-a-viz capital flight out of the People’s Republic.