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Chinese banks and payment services are halting Bitcoin trading. The government issued this order on March 27, and is giving establishments until April 15 to comply. Yet Bitcoin trading remains huge in China with the help of China VPNs and overseas processing centers.
BTC38 Shuts Down
BTC38 is one of China’s biggest Bitcoin traders. It announced on Wednesday that all Bitcoin processing with third party systems was put on hold. BTC38 is also no longer accepting new deposits in compliance with the ruling from the People’s Bank of China (PBOC). BTC38 reported that it would be ceasing to deal in Bitcoin because of government penalties. All banks that continue to deal with Bitcoin exchanges after the April 15 deadline will be penalized.
PBOC has been telling payment processing services to avoid dealing in the virtual currency since December of last year. PBOC shut down BTC China, another big Bitcoin exchange, two weeks after issuing the warning. BTC China recovered only after almost two months. It used bank transfers to trade in the cryptocurrency. This has now become impossible because of the order to close all Bitcoin trader bank accounts.
The move to close Bitcoin exchanges is related to the government’s move to enforce capital controls. People have been buying the crytocurrency with Chinese currency and selling it in the currencies of other countries. They have effectively used Bitcoin this way to get around the prohibition placed by the government on the export of money. Bitcoin exchange is almost untraceable, so they have mostly succeeded.
Bitcoin Trade with China VPNs
Now, payment services will have a hard time accepting Chinese currency in payment for Bitcoin. And because of the instability of the situation, they do not want to invest in building the ability to trade in Yuan. This puts a dent in things, but the virtual currency can still be traded using other currencies. With the help of China VPNs, people can still trade in the cryptocurrency anonymously. There are no rumors yet about a total ban on Bitcoin. But it may come about if the government sees that people continue to use it.
Bitcoin has been viewed as a revolutionary currency because of its decentralizing aspects. And China has been the perfect testing ground for the virtual currency. The market is therefore still very important as it poses a challenge for the currency with its heavy regulation and capital controls. And people in China are not surrendering Bitcoin yet. According to recent reports, they are still buying up to 10,000 Bitcoin every hour. Some of this may be due to the drop in the exchange rate. After BTC38 made its announcement Wednesday, the price went down to $436 from previous $484, which has already dropped from $558.50 per coin before PBOC’s March 27 announcement.
Bitcoin exchanges will soon be completely cut off from the traditional banking system in China. PBOC has a list of about 15 online traders who must close their bank accounts by April 15. This move also signals that China may begin shutting down other virtual currencies as well.