The central bank of China is closely monitoring the bitcoin market in order to avoid another “bubble”, claims CEO of BTCChina, while trade volume on the crypto exchange keeps dropping.
The whole idea about Chinese businessmen who use bitcoin to avoid the scrutiny of the state regulator is wrong, says Lee in his post on Medium.
“I suspect that the only people today who are using Bitcoin to bypass China’s capital controls are the ones doing it at a small scale, maybe a few thousand dollars worth. The big players, the ones who really want a Faster, Better, Cheaper, method for evading capital controls, are disappointed that Bitcoin still cannot deliver that today.”
Lee did not specify exactly what method he referred to but explained that there are ways more efficient than bitcoin. According to the entrepreneur, several people have asked him about the possibility to use bitcoin for transfer of capitals abroad, but in the end, none of them opened an account at BTCChina.
However, in his recent interview to Forbes, Lee voiced a contradictory view on the subject. He said that Chinese regulator sees bitcoin as a potential device to avoid capital control. He also disclosed some details about the recent activities of the Chinese regulator regarding the bitcoin market. According to Lee,
“They don’t want Chinese people getting hurt when a bubble crashes. As a result, the PBOC created a unit to investigate and break the coverage of the Bitcoin price increase. The PBOC went to the exchanges, gave all of them a slap on the wrist, and asked for apologies.”
That “slap on the wrist” at the start of the year shook the global bitcoin market and shifted the balance of powers in the crypto world. On 7 January, the People’s Bank of China announced it would carry out inspections at major bitcoin exchanges looking for a possible breach of the country’s financial regulations. The news resulted in a short-term collapse of bitcoin price, which by that time had reached its historical maximum of $1,153. A few days later, BTCC and Huobi stopped margin trading, while OKCoin reduced leverage to 1x.
On 19 January, the central bank reportedly found irregularities in the work of BTCChina, OKCoin and Huobi. A few days later the largest Chinese bitcoin exchanges introduced an extra fee on bitcoin and litecoin operations. Consequently, on 25 of January trade volume on Chinese bitcoin exchanges crashed. Three exchanges that had been responsible for more than 90% of the world’s bitcoin trade after that retain control of only about 30% of operations and the figures are still going down.