Inspections on Chinese bitcoin exchanges conducted by the People’s Bank of China led to significant changes in the global bitcoin trading market. In contrary to the expectations of many traders and investors of bitcoin, the inspections of the PBoC and the willingness of local exchanges to comply with regulators have legitimized the Chinese bitcoin market.
Almost immediately after the initial announcement of the PBoC, mainstream media outlets including BBC and Fortune pushed false narratives, claiming that the Chinese government cracked down on bitcoin exchanges and raided their offices. While Western media was preoccupied with sharing severely flawed representation of the Chinese bitcoin market, bitcoin exchanges including BTCC, OKCoin and Huobi were leading efficient and untroubled meetings with the PBoC and its inspectors.
The requests of the PBoC were quite straightforward; eliminate inflated trading volumes, terminate margin trading services and refrain from engaging in operations that may cause abnormal price fluctuations of bitcoin. Major Chinese bitcoin exchanges gladly complied with all of those requests. So far, the compliance of local bitcoin exchanges with regulators has led to a healthier global bitcoin trading ecosystem.
On January 24, Huobi, OKCoin and BTCC officially begun to charge trading fees of 0.2% to all users. The implementation of trading fees effectively eliminated inflated volumes, demonstrating accurate trading volumes of Chinese bitcoin exchanges.
Prior to that, inflated trading volumes stemming from the Chinese bitcoin trading market misled investors to believe that the Chinese market controlled nearly 95% of the global bitcoin trading market. While the three Chinese bitcoin exchanges still remain as the top 3 largest bitcoin exchanges in the world today, the volumes of the three exchanges are substantially lower. Currently, the combined market share of the three exchanges stands at around 30%, a percentage that is much lower compared to its previous market share of 95% shown last week.
In the upcoming weeks, investors and traders will be able to see a more balanced and accurate representation of the value and trading volumes of bitcoin.
The PBoC will continue its inspections on bitcoin exchanges in collaboration with Beijing Municipal Bureau of Finance and Municipal Bureau of Industry and Commerce. The central bank’s Department of Business Management will focus on leading inspections on payment settlement, anti-money laundering, foreign currency management and financial security.
In the meantime, PBoC asked investors and traders to be more aware of the risks involved in bitcoin trading and that users are responsible for their actions. The PBoC also urged investors to pay attention to market volatility and security of bitcoin and trading platforms.
Image Via: WSJ
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