China orders immediate shuttering of Bitcoin exchanges

And *clunk* – cryptocurrency value drops 20 per cent

By Kieren McCarthy in San Francisco

Posted in Business, 15th September 2017 21:07 GMT

China has ordered all Bitcoin and cryptocurrency exchanges to cease trading by the end of Friday, causing a massive drop in its value worldwide.

According to leaked documents and a series of statements from those running the local exchanges, China's regulators have told the exchanges verbally that they do not have a license to operate and must shut down immediately.

The document, which was issued on September 5 by the "Leading Group of Beijing Internet Financial Risks Remediation," lists a series of steps each exchange must go through.

They include devising a wind-down plan and supplying it to the authorities, ensuring that funds are secure, and identifying user bank accounts to pay cryptocurrencies into.

However the instructions also demand that the exchanges cancel any accounts that do not have connected bank accounts, and save all user and trading data on DVDs which they must then send to local authorities.

Unsurprisingly, this approach sent the crypto currency markets into a panic and all the main currencies fell by between 20 and 40 per cent.

Get out!

Several exchanges – including two of China's big three, Huobi and OKCoin – have already announced their closure, with one promising customers that they will be able to get their money out beyond the authorities' deadline of September 30. Although that same exchange also encouraged customers to withdraw their funds "as quickly as possible."

Worst hit was Litecoin – the fifth-largest cryptocurrency with a market cap of $1.7bn – which fell 37 per cent in value soon after the news broke. The largest currency – Bitcoin, worth nearly $49bn – fell by 19 per cent.

After the initial panic subsided, the currencies regained some of their value. The Bitcoin-to-US dollar exchange rate fell to a bottom of $2,980 from $4,690, and then recovered to $3,650.

It's unclear whether China is effectively banning cryptocurrencies or if it wants to use a licensing system to gain control of the system. The Chinese authorities have long used the threat of licensing to force companies to shut down, then get licensed officially, to give the government access to back-end systems. ®

Sign up to our NewsletterGet IT in your inbox daily

26 Comments

More from The Register

China plots new Great Leap Forward: to IPv6

It'll be a doddle because we invented it, claims state-owned organ Xinhua

Why is Bitcoin fscked? Here are three reasons: South Korea, India... and now China clamps down on cryptocurrencies

More like Ohsh-itcoin

China bans cryptocurrency fundraising schemes

Bitcoin, Ethereum values dip after 'Initial Coin Offerings' ruled dangerously disruptive

China flaunts quantum key distribution in-SPAAACE by securing videoconference

Satellite carries keys to Graz

China pollutes ocean with bloody big rocket

Long March, short flight

South China waters are red, Brit warships are blue, HMS Sutherland's sailing there

And Queen Lizzie will too

China may stick to its own DRAM memory soon – researchers

NAND thanks for memory, folks... we don't need you any more

Apple: Sure, we banned VPN iOS apps in China, but, um, er, art!

iGiant didn't want to aid censorship, but $10bn in revenue is $10bn in revenue

China staggering under WannaCrypt outbreak

Middle Kingdom's CERT puts infection rate in the thousands

China crackdown: VPN vendor gets prison

Nine months for letting punters bypass Great Firewall