China Begins Talks to Regulate Bitcoin

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China’s central bank held a meeting on Wednesday with several different Bitcoin exchanges amidst rumors that China could begin to strengthen regulations and oversight of digital currencies.

Representatives from China’s digital currency trading venues — BTCC (Bitcoin China), Huobi, and OkCoin — met with the People’s Bank of China in a private, closed-door meeting. The attendees were reluctant to provide details about the meeting, stating without any further elaboration that “money laundering” would be among the topics discussed.

According to Bloomberg, Bitcoin prices were down about 2 percent by 4:30 p.m. China time — the time of the meeting — in reaction to the news. The value of Bitcoin more than doubled in 2016; it was one of the best investments of the year and the best-performing currency worldwide, which experts often attribute to the looming worry of tighter regulation and control over it.

The manner in which the market reacts to this news highlights the deleterious effects of central banking on currencies, especially those not regulated by the government in question. Traders are currently rushing to short their Bitcoin.

“There are a lot of people shorting Bitcoin now, one because of the regulatory environment, another because the price is relatively high,” said Tian Jia, a Beijing-based Bitcoin trader. “The fact that PBOC [People’s Bank of China] continues to look into this issue might make people think that the whole thing isn’t over, and based on past trends, whenever the central bank holds meetings with exchanges the price will drop.”

The current concern over regulatory measure being imposed also stems from the People’s Bank of China’s statement after Bitcoin’s 20% crash on January 5th, in which they called for investors to make only rational investments in Bitcoin. They also urged BTCC to carry out “self-inspection” according to Chinese law.

Check back in the coming days for further news on this developing story.

 

Photo: On Man Kevin Lee/Getty Images

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Nicholas Amato

Nicholas Amato is the News Editor at Being Libertarian. He’s an undergraduate student at San Jose State University, majoring in political science and minoring in journalism.