Tiny Revolution: What Next for Bitcoin in China?

The great reshuffle of the Chinese Bitcoin industry is underway today.at reshuffle of the Chinese Bitcoin industry is underway today.

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Tiny Revolution: What Next for Bitcoin in China?
The great reshuffle of the Chinese Bitcoin industry is underway today.

Earlier today, BTC China tweeted what many had been expecting since the People’s Bank of China originally voiced its distaste for Bitcoin in December. “Dear users, Due to regulations, we have suspended CNY deposits from Bank of China. For further enquiries, pls email: support@btcchina.com,” it stated.

The news had little impact on BTC price, underlining the sense of resignation regarding the People’s Bank of China’s eventual crackdown on Bitcoin exchanges already widely felt in the community.

No surprises?

In practical terms, PBOC’s “reiteration” of its stance on Bitcoin means exchanges will not have access to banking facilities and will be limited in what operations they can perform. Five trading platforms (BTC China, BTCTrade, OKCoin, Huobi and CHBTC) issued a joint statement in which they, “after deep reflection and discussion, decided to take action to promote positive development of Bitcoin”.

In the meantime, Chinese exchanges have cancelled their attendance of the Global Bitcoin Summit in Beijing on May 10 – 11.

Some smaller have announced that they will cease trading altogether as a result of the directives, with FXBTC requesting that customers withdraw all RMB and cryptocurrencies ahead of the site’s closure on May 11.

The scale of Bitcoin use in China, despite the country previously having been one of its heaviest investors, is insufficient to warrant any significant changes to banking policy, Zhang Weiwu notes in his analysis of the news. “PBOC, in a serious tone, has delivered this message: ‘Yes, I take this tiny, tiny, tiny issue seriously,” he writes.

The implications for the future are various. While the regulations do not touch China’s mining hardware boom, which will keep revenue coming into the country as ASIC demand continues to grow, the relaxed approach by governments in neighboring Hong Kong and Singapore may well leave China lagging behind. As Weiwu notes, “Bitcoin is tiny in the financial sense, but it is revolutionary in its essence.”

However, it is too soon to know for sure to what extent the PBOC has created a stranglehold on the Chinese Bitcoin community. “I think people will figure out how to get around the regulations soon enough and that will be that,” Satoshi Nakamoto Institute founder Daniel Krawisz told CoinTelegraph. Questions will no doubt arise in this case as to the resolve of the PBOC should loopholes in any guise appear en masse once the dust has settled.

There is also optimism among various community members regarding a less tangible Chinese input, whose jitteriness caused much of the price volatility which has given Bitcoin negative press and public attention. The diminished presence of China could well be an acid test for stability in this sense.
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