China bitcoin arbitrage ends as punters work around capital controls
Published on Dec 11, 2013 6:10 PM
SHANGHAI (REUTERS) - The price gap between bitcoins trading in Chinese yuan and those sold for other currencies has evaporated in recent days, highlighting the porous nature of China's capital controls.
Chinese bitcoin chat rooms buzzed last month as investors noticed that the digital currency as sold on China's biggest exchange was more expensive, in dollar terms, than bitcoins traded abroad using dollars, creating a tempting arbitrage play.
Traders could earn profits by buying bitcoins using dollars on a foreign exchange such as Mt Gox, reselling them for yuan at the higher price on BTC China, the main local exchange, and finally converting the yuan back to dollars.
"Insane bitcoin. If you've got dollars, hurry and do arbitrage," a user called 'foxtree' wrote on Weibo, a Twitter-like micro-blogging platform, on Nov 19, the day the gap peaked at more than 30 per cent.
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