Bitcoin trading China warnings by central bank, ForexSQ experts say the Bitcoin trading in China warns by central banks as the Bitcoin trading platforms provide high margin trading.
Bitcoin trading China warning
[sam id=”8″ codes=”true”]
China’s central bank has warned the country’s Bitcoin exchanges against margin trading and money laundering, in a further step to tighten regulation over the digital currency.
An inspection team from the People’s Bank of China (PBOC) met and gave verbal warnings to company officials of nine Beijing-based Bitcoin trading platforms Wednesday afternoon, according to a PBOC statement Thursday.
The PBOC ordered the exchanges not to engage in margin trading, money laundering or practices violating laws on foreign exchange, taxation and advertising.
Trading platforms will be closed if they seriously violate the regulations, according to the statement.
The company officials were also reminded of the technology risks of Bitcoin trading.
Bitcoin, without ties to the bank or government, is underpinned by blockchain technology, a digital ledger system that uses cryptography.
It allows users to spend and transfer money anonymously, making the digital currency a handy tool for money laundering and capital flight.
With its help, investors are able to buy with Chinese yuan and sell for US dollars, effectively bypassing the annual forex purchase quota of $50,000.
China has strengthened scrutiny over illegal forex purchases amid capital outflow concerns as the yuan weakened against the US dollar.
Many exchanges also offer margin trading, which allows investors to trade Bitcoin using borrowed funds and capitalize on Bitcoin’s price fluctuations but which also amplifies risk.
The value of Bitcoin surged in the second half of 2016 but plummeted after surpassing 8,000 yuan ($1,165) per unit early in January this year.
Last month, the PBOC conducted on-site checks to BTCChina, the country’s biggest Bitcoin trading platform, and two other major Bitcoin exchanges, Huobi and Okcoin.
The nine exchanges warned Wednesday, included CHBTC, Btc Trade and HaoBTC.