China to halt bitcoin trade by end Sept

An employee at Bitmain, one of the largest Bitcoin farms in the world, in Inner Mongolia. Beijing's motivation for the exchange ban comes amid a broad clampdown on financial risk in the run-up to a Communist Party leadership reshuffle next month.
An employee at Bitmain, one of the largest Bitcoin farms in the world, in Inner Mongolia. Beijing's motivation for the exchange ban comes amid a broad clampdown on financial risk in the run-up to a Communist Party leadership reshuffle next month.PHOTO: NYTIMES

BEIJING • China has notified regional regulators that it aims to stop exchange trading of cryptocurrencies by the end of the month, according to people familiar with the matter.

The plan was distributed by a People's Bank of China-led group overseeing Internet finance risks, said the people, who asked not to be named.

The notice suggests policymakers will move quickly with their most far-reaching measure to rein in the growth of cryptocurrencies. China's crackdown, which includes a ban on initial coin offerings announced last week, has fuelled a 30 per cent sell-off in bitcoin from its all-time high on Sept 1.

The digital currency tumbled on Thursday after BTC China, one of the country's largest cryptocurrency venues, said it would stop handling trades by month-end.

Rivals OKCoin and Huobi said they have not received any regulatory orders to stop. The People's Bank of China did not comment.

The cryptocurrency dropped 9.3 per cent to US$3,077.55 yesterday morning in London, extending this week's decline to 28 per cent.

The ban will apply only to trading on exchanges, people familiar with the matter told Bloomberg on Monday. The authorities do not have plans to stop over-the-counter transactions, the people said.

China accounts for about 23 per cent of bitcoin trades and is also home to many of the world's biggest bitcoin miners, who use vast amounts of computing power to confirm transactions in the digital currency.

While Beijing's motivation for the exchange ban is unclear, it comes amid a broad clampdown on financial risk in the run-up to a Communist Party leadership reshuffle next month. Bitcoin's surge over the past few years has fuelled concerns of a bubble and prompted warnings of a potential crash from sceptics including JPMorgan Chase's Jamie Dimon and billionaire investor Howard Marks.

Some market observers have speculated that China will allow cryptocurrency exchanges to reopen once the government has measures in place to provide greater oversight.

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A version of this article appeared in the print edition of The Straits Times on September 16, 2017, with the headline 'China to halt bitcoin trade by end Sept'. Print Edition | Subscribe