BTCC was one of the earliest cryptocurrency trading platforms in China, indeed the world. The company announced that other operations including its mining operation BTCC Pool would not be affected by the change. China has huge cryptocurrency mining operations. On September 4th, the People’s Bank of China announced a ban on all initial coin offerings (ICO’s) by which new cryptocurrencies were financing operations as discussed in a recent Digital Journal article. The announcement caused a precipitous decline in the value of bitcoin and other cryptocurrencies.
On Thurdsay at 8:13 AM Eastern TIme bitcoin was trading down 6.6% at 3,634.82 to the US dollar. Bobby Lee, the Bitcoin CEO tweeted the announcement on Thursday. Bloomberg, reports that China Business News claims that the City of Shanghai had ordered the closing of all bitcoin platforms. The Crypto Coins News also cited a local newspaper as saying that banning bitcoin exchanges was certain. China is not the only country that is worried about cryptocurrencies. The Financial Conduct Authority , a UK monitor warned investors about the risks and dangers of ICO’s. To add to the unease Jamie Dimon, the CEO of JPMorgan claimed that bitcoin was a fraud and would eventually blow up. While bitcoin’s price may have risen in a bubble blown by speculative investment and much hype about the coin, it will probably survive. Indeed it is now being used more often in transactions. The block chain technology that underlies the production of bitcoin will likely revolutionize financial and other transactions. No doubt this may appear as a threat to JP Morgan. Contrast Dimon’s reaction with that of China that while seeing independent exchanges as a threat is contemplating its own cryptocurrency. North Korea appears to be amassing the coins and will use them to avoid the global system of which JP Morgan is a part. Early investors in bitcoin could point out that although it is has dropped a quarter from its September 1 high, it is still up almost 300 percent this year, not a bad return on investment. However, many may be deciding to reap some of their profits now and buy back in when the decline stops and a recovery in the price is evident. Many investors avoid purchasing during a decline in hopes that there will be a quick turnaround, or “trying to catch a falling knife as it is called”. No doubt there is short selling as well, but that will need to be covered in time, perhaps halting the decline. Although exchanges may be shut in China over the counter (OTC) trading between individuals will still be allowed and no doubt volume will increase dramatically. There is some doubt whether China will actually ban all exchanges or only regulate them as suggested in the appended video from Dubai.
