PBOC Dialogue Set with Bitcoin Exchanges

Olivier and Mann - PBOC Dialogue Set with Bitcoin Exchanges
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Olivier and Mann

The People’s Bank of China (PBOC) is set to hold a private dialogue with Chinese bitcoin exchanges, increasing the possibility that the bank will strengthen the monitoring of digital currency trades.

Officials from China’s central bank will be meeting with executives from the country’s trading channels and money laundering is one of the topics on the agenda.

Bitcoin reacted strongly to previous reports that Beijing will be imposing stricter measures on digital currencies to end capital flight.

The People’s Bank of China declined to comment on the rising number of purchases for Bitcoin that are believed to have been made to hedge against the Yuan’s devaluation. Bitcoin has risen by 120% over the course of 2016.

The price of Bitcoin dropped after the meeting was announced.

A lot of investors now are shorting Bitcoin due to the possibility of increasing oversight and its comparatively high cost. The PBOC’s study of cryptocurrencies is making investors believe that the issue is not yet over and based on historical situations, the price falls whenever the central banks start involving themselves more.

The Chinese market has become a key player in the cryptocurrency market in recent years as its investors have become keen traders and miners of the currency. The need for a currency substitute, the absence of fees and the low cost of generating the currency has fueled the interest in Bitcoin but any government scrutinisation could stifle the marketplace.

Three of China’s biggest Bitcoin trading channels have started imposing transaction fees of 0.2% to limit speculators and avoid wild price movements said the companies. Officers from the businesses suggested that the PBOC should create a third-party custodian platform to avoid transactions from stealing users’ money.

The traded volume of Bitcoin fell in China after the implementation of exchange fees at a time when its price had increased 11%, prior to the PBOC meeting being disclosed.