Lots of bad news about China and Bitcoin, and good news about new blog
I have lots of things to catch you all up on, but let me start with the international news items first.
This month, China has basically pulled the plug on Chinese citizens’ easy ability to buy or sell Bitcoins and other cryptocurrencies.
It transpired in stages, long before there was any official policy announced from on high.
- First, an anonymous writer for the respected financial paper, Caixin, wrote late on a Friday evening that the government was planning to ban Initial Coin Offerings (ICOs), which has become a popular (and often abused) method for blockchain projects to quickly raise funds.
- Prices for digital assets like Bitcoin dropped sharply over the weekend all over China, and to a lesser extent around the world.
- A few days later, Caixin published another article saying that 60 ICO platforms were being shut down. Further, all ICOs were to be halted immediately, and investors’ funds returned as soon as possible.
- While those folks were scrambling to comply with the new rules, prices continued to fall. Bitcoin values dropped from the mid-$4,000 range to around $3,000.
- Then, two major Bitcoin exchanges, OKCoin and ViaBTC, announced they were closing up shop by the end of the month. Another, Yunbi, was rumored to be closing down as well. It later confirmed to its patrons that all trading would cease on the 20th. Two others, Huobi (pictured above) and BTCChina announced they would end all trading between Chinese yuan (CNY) and crytocurrencies, but would maintain US Dollar trading for international customers.
- Bitkan, a peer-to-peer exchange, has also announced trading on its platform would end.
To make a long story short, the government has throttled crypto trading to a mere fraction of what had been even after the last government restrictions began in January.
The quasi-official reason for the hammer dropping is to protect Chinese citizens from financial fraud. But there are other reasons the government is not sharing, but we can surmise what they are.
Number one, the National People’s Congress, which meets every five years, will convene next month. This is a major event, bringing together hundreds of delegates from all over the country to discuss and eventually rubber stamp the policies proposed by the Politburo. The government typically clamps down on everything in China — but especially in Beijing — before these congresses convene. The last thing the Party wants is some major scandal — like thousands of people losing money in some shady investment deal — just before the congress.
Second, China’s economy is suffering (see chart abve). There are rumors flying that the government will devalue the yuan.
The People’s Bank of China has also been trying to cut off capital flight, that is, Chinese citizens moving their funds offshore. Cutting off investments in cryptocurrencies is but one effort. Lavish all-inclusive junkets to the gambling mecca of Macau is yet another avenue that’s been restricted.
Chinese bank account holders must now also report any withdrawals from ATMs or payments above $150 a day while traveling abroad. Otherwise, they be suspected of money laundering.
So, it seems shutting down the cryptocurrency exchanges is but one piece of a larger plan to shore up the Chinese economy by any means possible, and maintain a “harmonious society” in the weeks leading up to the big party congress in Beijing.
Whether the cryptocurrency shutdown is permanent remains unknown. The Chinese government, as I’ve noted before, can reverse so-called final decisions without providing any forewarning or reason. It’s just how it works. Perhaps in a few months, the Party will decide cryptocurrency trading is not a threat to the harmonious society, and will allow the exchanges to re-open trading. Perhaps not. All we can do is wait and see.
From a personal standpoint, it pisses me off, as I was using Bitcoin to transfer my pay from China to the USA. I still can, but the means have become less convenient, if not impossible. Since I am still in the USA (more about that later), I won’t know until I try it in China.
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Changing the subject somewhat, I’ve decided to split my blogging here into two parts by creating a separate blog, Wheat-dogg’s Crypto-Info Pages, in which I will write about Bitcoin and related topics. I’m still developing it, so if you follow that link, you may be disappointed in what you see.
Writing about cryptocurrency-related topics I felt detracted from the main purpose of this blog, which has developed into a record of my living and working in China, along with some occasional science, travel or photographic enterprise. Setting crypto topics aside as pages is cumbersome, and more importantly, perhaps of little interest to people wanting to read about teaching in China.
At the same time, I want to write about cryptocurrencies more than I have here, but I don’t want to bore my readers disinterested in such stuff. I have blogged about digital assets topics on my Steemit account, but my readership there is somewhat limited to Steemit users. I’m hoping writing on a new WordPress blog, with automatic postings to Twitter, Facebook and Medium, will provide a wider audience.
So, beginning today, any detailed discussions about Bitcoin, etc., will be on the new blog. Existing posts and pages here will remain, however.
I hope in the next few days to develop the new blog into something readable. I only began it this morning. So be patient!
Originally published at Wheat-dogg’s World.