BEIJING
— A major Chinese exchange specializing in the trading of Bitcoin
announced on Thursday that it would stop trading by the end of the
month, amid a broader crackdown against virtual currencies by the
authorities in Beijing.
The
announcement by BTC China, the country’s first and largest digital
currency exchange, came days after the Chinese authorities banned
fund-raising for new digital currencies, and amid worries that
regulators would tighten rules surrounding currencies like Bitcoin.
The
exchange’s decision is the first of its kind in China, and it raises
the specter of other exchanges shutting down Bitcoin trading in the
future.
China
has sought to walk a tightrope when it comes to Bitcoin and similar
virtual currencies. Whereas the currencies provide the country with a
chance to develop new and emerging technologies, officials also worry
that they would allow Chinese consumers to get around tough restrictions
on how much money they can send overseas and allow them to be used to
launder money.
Still,
the impending closing of BTC China’s online currency trading operations
is a blow to the country’s aspirations to lead the way in the sector.
Some two-thirds of all Bitcoin issued daily is “mined” in China,
and an array of other companies benefit from such efforts, including
equipment suppliers and construction firms that build enormous Bitcoin
farms.
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“It’s
a sad day for the Bitcoin community here in China,” said Wei-Tek Tsai,
the director of the Digital Society and Blockchain Laboratory at
Beijing’s Beihang University.
In a statement
published on the messaging platform WeChat, BTC China said it would
“stop all trading on September 30.” It said the move was in response to a decision this month by Chinese regulators to ban so-called initial coin offerings, in which new digital currencies seek to raise funds.
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The price of Bitcoin dropped more than 10 percent on Thursday, to around $3,500, in the hours after the announcement.
Bitcoin
is increasingly in the spotlight around the world. Its proponents — a
group that includes tech enthusiasts, civil libertarians, hackers and
criminals — cheer the fact that it can be sent across borders
anonymously and that it is not regulated by a central authority like a
typical currency.
China
has emerged as the leading force in Bitcoin trading in recent years.
But as the virtual currency’s profile has risen in the country, Chinese
regulators have increasingly sought to control how it is traded and
used. When they stepped up their oversight of Bitcoin trading this year,
it led to a rapid and substantial drop in trading volumes.
“Because
it is traded anonymously and peer to peer, Bitcoin makes it easy for
money laundering and tax evasion,” said Sheng Songcheng, an adviser to
the People’s Bank of China, the country’s central bank.
Official
Chinese news media has cited officials as saying they want to close
Bitcoin exchanges — a move that precipitated Thursday’s decision by BTC
China — though they have not set a time frame.
China
Business Network, a financial and business news portal, said on
Thursday that the authorities in Shanghai, where BTC China is
registered, would close all Bitcoin exchanges within their jurisdiction
by the end of the month; and the report piled on further uncertainty.
Though
the moves by the Chinese authorities this month have resulted in
declines in the value of Bitcoin, some argue that they will allow for a
more even geographic distribution in the online currency’s trading and
mining.
“The
overall share of Chinese exchanges has been diminishing steadily,” said
Thomas Glucksmann, marketing manager for the Hong Kong-based Bitcoin
exchange Gatecoin. Mr. Glucksmann said that much of the Bitcoin
community had been concerned about the increased level of scrutiny in
China and had been moving their assets out of the country.
“People will realize that China is out of the picture for the moment,” he said.
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