The trade on the decentralised crypto marketplace has rocketed after the People’s Bank of China issued a warning to domestic bitcoin exchanges.
According to Coin Dance, in the week ending on 11 February, trading volume on LocalBitcoin China reached 6,599,940 Chinese yuan ($952,260). For the previous week, the figure was only 1,473,272 yuan ($214,196), which means that over that period the trading volume in yuan increased more than fourfold.
Bitcoin activists on Reddit agreed that the growth is the result of the recent actions of Chinese central bank, which has started enforcing anti-money laundering and foreign currency regulation on domestic bitcoin exchanges.
“I think Localbitcoins is one of the few exchanges that try to fulfill the anarchic spirit of bitcoins,” wrote user burglar_ot.
Other users noted that the People’s Bank of China can similarly block LocalBitcoin in the country.
“They can always ban LocalBitcoins as well. The central bank can do anything in that country. What we need is to be able to do anything with Bitcoin, including paying rent or at the supermarket. After this, the central banks won’t matter anymore,” wrote user Maraat.
On 9 February, the Chinese regulator held a meeting with representatives of nine domestic bitcoin trading platforms. Among all, it urged the exchanges to limit margin trading and zero-fee trading. All the involved exchanges agreed to these requirements.
Soon after the meeting, two largest Chinese exchanges OKCoin and Huobi declared they freeze bitcoin and litecoin withdrawals for a month, while the platforms are being upgraded to comply with the law. As the result, the price of bitcoin dropped sharply below $ 1,000 and hit $958, losing about 7.5% within a few hours.
Today, another one of the nine, bitcoin miner, wallet provider and exchange HaoBTC announced it is going to cease its trading activity.
Update#2: HaoBTC announced will remove its exchange functions. The main services (mining and online wallet) remain unaffected— cnLedger (@cnLedger) February 13, 2017
Chinese exchanges that previously were responsible for more than 90% of the global bitcoin trade lost a significant part of their market share.