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Screenshot of a breaking news alert e-mail from Q2 2017
The People’s Bank of China has been investigating major Bitcoin exchanges in the country including BTCC, Huobi and OKcoin.
Huobi and OKCoin have formally announced they have halted margin trading services.
The Shanghai Head Office of the People’s Bank of China has found after an initial investigation that BTCC was engaged in illegal operations and financing activities, according to the China News Service citing a Beijing Youth Daily report. The newspaper also reported that funds and capital on the platform were not guaranteed by third-party custody terms.
Huobi and OKCoin, along with BTCC, have been found to be carrying out illegal financing.
Financing operations may be ended by these Chinese exchanges subsequent to the PBOC action. OKCoin and Huobi have confirmed that they had stopped offering margin loans, Reuters reported earlier, adding that,
Both did not respond to queries on whether they had received official notices from the PBOC.
The Chinese Financial Information provider Hexun even stated in a report that the PBOC investigation found these exchanges “not in accordance with the provisions of the establishment of a sound anti-money laundering internal control system.”
There is no clarity so far if margin trading is indeed illegal in China. While Bobby Lee of BTCC told Reuters:
No one has said that margin trading for Bitcoin is illegal.
The Beijing Youth Daily commented:
A PBOC investigation found that China’s three largest Bitcoin exchanges were illegally conducting margin trading and such activity stoked abnormal market volatility.
Trading fees to be introduced
China is a country where no fee was being charged by exchanges, therefore there’s always been some controversy about the trading volumes there.
Bobby Lee of BTCC in his interview to Reuters did mention the possibility of fee introduction subsequent to the regulators getting involved.
According to the Chinese publication Jiefang Daily, the Shanghai headquarters of the PBOC in its latest communication has “reminded institutions and individual investors that they should attach great importance to platform risks and safeguard their own property and safety.”
Many traders shared that they are still in “wait-and-see” mode, pending any formal statements from China’s regulators.