The People's Bank of China has once again intensified its oversight of Bitcoin trading platforms. Following a series of crackdowns, domestic Bitcoin exchanges have either shut down or moved their operations overseas. However, over-the-counter (OTC) trading has seen a resurgence, with some platforms continuing to operate in disguised forms. The central bank has made it clear that even if these platforms move abroad, they will not be beyond the reach of Chinese regulators.
Recent reports indicate that the central bank is implementing stricter measures to monitor and regulate both domestic and international virtual currency trading activities. This includes cracking down on commercial entities involved in cryptocurrency transactions, as well as shutting down websites and apps related to initial coin offerings (ICOs) and digital asset exchanges. The central bank has also warned that any platform found violating regulations could face immediate closure, with further regulatory actions expected in the future.
In response to the growing trend of OTC trading, authorities have been actively monitoring and blocking access to overseas platforms. These platforms often operate from locations such as Hong Kong, the U.S., and Japan, using various models like C2C trading, wallet-based apps, or hybrid models that combine on-floor and OTC transactions. Some of these platforms have even managed to create indirect channels for RMB-to-Bitcoin trading, which poses additional risks to investors.
According to a report by the National Internet Financial Security Technical Expert Committee, the volume of OTC Bitcoin transactions surged significantly in late 2017. In just two weeks during November, three major global OTC platforms processed over 680 million yuan in Bitcoin transactions. This indicates that despite regulatory efforts, the demand for unregulated trading remains strong.
The report also highlighted the increasing diversity of OTC platforms, with 21 such services supporting Bitcoin against RMB. These platforms allow users to conduct private, one-on-one trades, often through messaging apps or dedicated wallets. While this form of trading predates centralized exchanges, it has become a popular alternative for those seeking to avoid strict regulations.
The China Internet Finance Association has issued warnings about the risks associated with overseas trading platforms. It pointed out that while these platforms may appear more accessible, they are still subject to regulatory scrutiny and can be banned or restricted at any time. Investors are advised to remain cautious and aware of the potential for market manipulation, money laundering, and other financial risks.
In addition to targeting trading platforms, the government has also taken steps to regulate Bitcoin mining operations. By removing certain tax incentives, authorities aim to gradually phase out inefficient or non-compliant mining activities. Furthermore, payment service providers have been instructed to stop facilitating transactions between digital currency traders and traditional financial institutions, signaling a broader push toward stricter control over the cryptocurrency sector.
As the regulatory environment continues to evolve, the central bank has made it clear that any entity found engaging in illegal or non-compliant activities will face swift consequences. With more stringent measures likely to follow, the landscape of cryptocurrency trading in China is expected to become even more tightly controlled in the coming months.
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