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Sunday, April 27, 2014
Bitcoin Updates April 27 , 2014 -- Chinese bitcoin exchange BTC China has stopped accepting RMB deposits to user accounts from a major bank ( China Merchants Bank ) , revealing the move in a post on its Weibo page - action came as China Merchants Bank announced it would no longer allow its customers to engage in bitcoin related transactions and essentially would require all such businesss to close their accounts !
UPDATE (27th April, 4:55 BST): Chinese bitcoin exchange BTC China has stopped accepting RMB deposits to user accounts from a major bank, revealing the move in a post on its Weibo page.
Management decided to proactively halt deposits from one of the country’s largest banks, China Merchants Bank, after the bank posted on its public website that it would no longer allow its customers to engage in bitcoin-related transactions, and said essentially it would require all such businesses to close their accounts.
Withdrawals to China Merchants Bank accounts and transactions with other banks remain unaffected, at least for the moment.
A rough translation of BTC China’s Weibo post reads:
“Due to a notice issued by China Merchants Bank, BTC China, out of consideration for user security and stabilization operations, decided to suspend the credit of accounts with RMB.
For subsequent updates, please pay attention to our website and Twitter, thank you again for your interest and support of BTC China.”
BTC China CEO Bobby Lee said his company had not yet any direct notifications from any of its banking partners, but was ready to act should such information arrive. Apart from the China Merchants Bank website posting, which did not specify any exchange by name, no other banks have stated their intentions as yet.
This followed reports last week that financial institutions were preparing to sever links with bitcoin exchanges, after closed session meetings with People’s Bank representatives. Bitcoin value dropped roughly $40 probably as a result, a position from which it is not yet recovered.
The meetings were reportedly more grave in tone than on previous occasions, suggesting the PBOC would soon set stricter rules about how its earlier edicts should be followed. As well as preventing users from funding their bitcoin exchange accounts, the new guidelines could eventually limit their ability to withdraw from bitcoin and litecoin into yuan as well.
Official policy has not actually changed since last December, when the PBOC first expressed its concerns. Different interpretations of what the central bank’s rules still permitted, however, allowed exchanges to experiment with other options including funding via personal bank accounts and voucher systems.
Lack of clarity
The issue has become known as the Chinese ‘ban-unban’ story on forums such as reddit, stemming from the fact that at various stages authorities have met with select groups to discuss policy, which resulted in actions affecting only certain companies, business relationships, or sections of the bitcoin economy (such as deposits to exchange accounts).
The PBOC itself has continued to deny that it will ban bitcoin outright, though it has not made any public statements about how it intends to restrict digital currency use in the country.
CoinDesk will continue to monitor this developing story.
Yesterday, Caixin reported that the PBOC, led by the Payment and Clearing Organization of China, has been having meetings and interviews with commercial banks, third party payment processors, and Bitcoin exchanges within China. PBOC officials made it very clear that they wished to completely cut off the funding line of Chinese RMB into Bitcoin trading platforms around the country. The renewed interest in Bitcoin by the PBOC has led to funding shuffles from every Chinese Bitcoin exchange. Cryptocurrency exchange rates across the board have suffered since the first rumors of renewed the renewed PBOC crackdown when they surfaced in March. The previous deadline for Chinese payment processors, including banks, to halt services for Chinese Bitcoin companies was supposed to be 4/15/14. However, on that date, Chinese Bitcoin exchanges announced their future plans and the exchange rate soared, much to the embarrassment of the PBOC. In recent response, the PBOC stressed that vouchers, codes, and roundabout recharge methods still counted as providing services to Bitcoin trading platforms. Now, it seems that Chinese Bitcoin exchanges will need to expedite their plans for webapps, ATMs, overseas accounts, and overseas websites.
BTC China, the first Chinese Bitcoin Exchange to adapt to the original PBOC notice in December of 2013, has been using a code recharge system for Chinese Yuan (RMB) deposits for the last several months. However, this morning they have announced an end to Chinese RMB deposits on their website, for now. For other Chinese Bitcoin exchanges, the previous source of Chinese RMB recharges/deposits, recharge codes, have since dried up. Searching on Chinese online marketplace Taobao for “bitcoin” will result in an error message as the PBOC specifically mentioned that online marketplaces providing these auctions were facilitating Bitcoin trade.
In March, Caixin reported on an internal memo sent from the PBOC to banks and third party payment processors within China titled: Notice on Further Strengthening Bitcoin Risk Prevention Measures. The Notice prompted BTC China’s competitors to emulate BTC China’s funding model. In the light of the recent strict crack down on Chinese banks providing accounts to Chinese Bitcoin exchanges, some Chinese Bitcoin exchanges are turning to more unconventional funding methods: such as ATMs. The PBOC is now trying to ensure that all Chinese banks and third party payment processors cease any and all contact with Chinese Bitcoin exchanges. It’s always worth mentioning that the Chinese government has not stated that bitcoin is banned for merchants or individuals to use.
Because of this morning’s announcement by the China Merchants Bank, BTC China, in the interest of its users and platforms security, has decided to suspend Chinese RMB recharges (deposits). For subsequent updates, please follow our official website and Weibo account, thanks again for your patronage and support of BTC China #BitcoinAnnouncement#
The Bitcoin community around the world is eager to see how Chinese Bitcoiners will respond to these most recent PBOC actions. Some onlookers have hinted that Hong Kong, or other Special Economic Zones in China, might welcome Chinese Bitcoin exchanges. Furthermore, that the Chinese government might turn a blind eye and allow them to thrive and innovate there, as has been a standard modus operandi for the last few decades for risky new industries.