It’s been a stressful few days for China’s Bitcoin enthusiasts, as the People’s Bank of China (PBOC) seems to have expanded its investigation of the country’s Bitcoin exchanges. After last month’s meetings with the three largest domestic exchanges saw those companies implement new fees and other policy changes, the PBOC this week turned its attention to nine of the smaller Bitcoin platforms. In a meeting with those exchanges on Wednesday, the central bank reportedly focused on the need for greater anti-money-laundering efforts.
The latest central bank warnings had an immediate effect, as OkCoin and Huobi – two of the largest Chinese Bitcoin exchanges - announced today that they will be suspending all withdrawals of Bitcoin and Litecoin for roughly one month. That suspension is a direct response to the PBOC’s demand that exchanges upgrade their anti-money-laundering systems to comply with the country’s current laws. Bitcoin’s price tumbled below $1,000 again, just as it had done after the PBOC’s intervention in January.
In comments to the Wall Street Journal, BTCC CEO Bobby Lee offered his own thoughts about the central bank’s ongoing intervention:
“It’s an open secret that the PBOC is not happy to see bitcoin prices go up. With the recent rise they’re taking actions to see the price go down.”
Lee also noted that there has been no clear indication yet about how the PBOC plans to regulate Chinese exchanges. Instead, the regulators are relying on scare tactics to manipulate exchange activities. Still, with continuing Chinese fears that Bitcoin could serve as a vehicle for increased capital flight, it may be just a matter of time before the central bank takes more direct action to ease its concerns.