OKCoin Archives

Ethereum activities gain traction in China during Bitcoin’s struggle through scrutiny

Posted on April 30, 2017 | by [email protected]

China has been the major reason for sudden spikes in Bitcoin prices during 2016 owing to the hedging activities of Chinese investors during Yuan’s devaluation. These activities brought the cryptocurrency under the scrutiny of the Chinese Central Bank that has been fighting off capital flight for some time now. As PBOC believed that Bitcoin might be one of the easy and efficient ways to send money out of the country, they have decided to place strict KYCs for the Bitcoin exchanges. To set up an able system that monitors and regulates any laundering activity, the exchanges have banned fiat withdrawals that led to a sudden drop in volumes from China. While the process is still in motion, Bitcoin’s conjugate Ethereum has picked up the pace in China with better adoption and group meetings on regular basis. Let’s look into the details of Ethereum and how it has been making progress in China:

Ethereum as Bitcoin’s conjugate:

Ethereum has consolidated its place in investor portfolio owing to its multiple applications and its growing stability. The cryptocurrency jumped by $5 from $42 to $47 when Bitcoin crumbled under the pressure of a possible hard fork. This revealed that investors are transferring funds between Bitcoin and Ethereum as part of their portfolios interchangeably according to the shifting dynamics of the cryptocurrency. Hence Ethereum truly has become Bitcoin’s conjugate and owing to its executable smart contracts on Blockchain is finding good value with the investors.

Increasing activity in China:

Ethereum activities are increasing in China, due to increasing interests in the Enterprise Ethereum Alliance and the Ethereum network’s applicability to a wide range of infrastructures across a multitude of industries.Chinese bitcoin exchanges have recognized a surge in interest and demand for Ethereum. As a result, major bitcoin exchanges including OKCoin have announced the integration of support for Ethereum or Ether trading.

CnLedger announced:
“Our source tells us OKCoin is now planning on listing Ethereum. “May list it at the appropriate time.” Confirmed by OKC customer service.”

What Ether’s future looks like:

At the time of writing this article, Ethereum passed $80 reaching an all-time high. Consequently, the market cap for Ethereum has moved from $6 Billion to over $7 Billion. With a significant presence now in the Chinese sphere, Ether trading is bound to pick up. Regular meet ups over ETC and ETH are being conducted in China with the cryptocurrency proponents taking keen interest in the structure of the digital asset and its applications.

Banking problems hound Bitcoin exchanges, force few more exchanges to ban withdrawals

Posted on April 21, 2017 | by [email protected]

Bitcoin exchanges have been plagued by the problem of Commercial banks sometimes denying transfers affecting their functioning. Most of the times, the banks back up their actions by citing that with Bitcoin’s stature still being unregulated, they don’t want to get involved in anything that might turn out to be illegal. Most of the Bitcoin exchanges have great KYC and AML frameworks that allow them to put in the guardrails that prevent their customers from engaging in illicit activities. The question is are the banks really fearing regulation to put an end to transactions related to Bitcoin? Or is just an excuse to hamper the growth of the cryptocurrency that might outplay the banks. Whatever the case might be, the issue has escalated and is taking a toll on traditional Bitcoin exchanges. Let’s delve deeper into the dynamics of the problem and its effects:

Bitfinex’s lawsuit and the implications:

Bitfinex initially took Wells Fargo to the court for having reversed US Dollar cash deposits designated to their customer accounts coming from the exchange. The legal basis for the lawsuit lies in the fact that Bitfinex works with Taiwanese banks, including a bank called ‘Taishin’. Tashin is responsible for relaying the transfers to US customers using Wells Fargo, among others. Wells Fargo recently sent a letter to the Taiwanese bank informing them that they would no longer be accepting the deposits from these accounts until “further due diligence” was obtained.

However a week later Bitfinex withdrew the lawsuit as experts believed there was not enough legal standing for the case. However, they followed up with an announcement which announced that they would be banning withdrawals indefinitely.

Other Exchanges report the same issue:

A couple of days later major Bitcoin exchanges like BTCe and Okcoin reported the same issue. The bitcoin exchange Btc-e has announced on Twitter that it is not accepting U.S. dollar wire transfers until the end of the month. This has been attributed to a bank account problem. Following this Okcoin has also suspended US dollar deposits have been suspended because of issues with intermediary banks. The exchange has also gone on to warn the customers against making any deposits as they might be rejected. The announcement cited that the deposits will resume as the exchange find alternatives for the complication.

Third party banks de-risking or putting up a fight with Bitcoin?

Intermediary banks like Wells Fargo are known as third party banks that are responsible for these transfers. They support international transactions and transaction settlements. Since Bitcoin businesses don’t have a defined regulation, what these major banks are doing can put them in a position of risk. Hence what they are doing can be defined as ‘de-risking’ to avoid any possible legal issues. However, this might also turn out to be a move to hamper Bitcoin’s growth and its growing reputation. How exchanges will circumvent the challenges to operating smoothly again is to be seen.

Bitcoin Bull Run staggered as Major Chinese Exchanges halt withdrawals temporarily

Posted on February 9, 2017 | by [email protected]

For the past couple of months, whenever Bitcoin price gets momentum and is approaching the all-time high, China has played a spoil sport in ruining the price rise. This happened once at the start of 2017 when the probing of Chinese authorities into the operational model of the exchanges tanked the prices all the way back to $750 from near all-time high. The story of Bitcoin on 9^th February is no different, the cryptocurrency was in a study Bull Run and the currency’s proponents were expecting a high breach sometime this week. While everything looked compact, the new announcement of the leading Chinese exchanges Huobi and OkCoin came up with an announcement that made the markets instantly bearish on the short term scale. Let’s dive deep into the details of what exactly happened:

The announcement:

Two of China’s top three Bitcoin exchanges Huobi and OkCoin announced that they will suspend Bitcoin and Litecoin withdrawals for a month effective immediately. During this one month period both the exchanges would set up automated monitoring systems and checks in place to prevent money laundering. While these restrictions are in place, Reminibi withdrawals wouldn’t be affected and no limit is set upon them. Both the exchanges indicated that the upgrade would be to combat “money laundering, exchange, pyramid schemes and other illegal activities”. No update was provided by BTC China on this front.

The reason behind the scrutiny:

China has been facing the problem of ‘Capital Flight’ for some time now. Implementation of ‘Capital Controls’ over various assets hasn’t been fruitful. During the course of 2016, Chinese Government has realized that while Yuan was being devalued, Bitcoin experienced unusual surge in prices. This was because investors were shifting their funds from traditional Chinese assets to Bitcoin. Chinese officials and PBOC have come to a conclusion that Bitcoin is being used for ‘Capital Flight’ and are keen to impose capital controls over the digital currency in 2017.

Effect on Bitcoin Price:

While the currency temporarily is experiencing a short term bearish trend, things would look better after a month’s period when the exchanges become fully functional. The impact of the move shouldn’t last long as Japan has already begun eating into China’s volumes owing to their growing adoption. When the Chinese exchanges imposed transaction fee and put a check on leverage available, the automated traders have sought Japanese exchanges as their new haven. After a little setback, technically Bitcoin market should be able to recover in quick time.

Investors Rush for the Exits as China Moves to Halt the Rally in Bitcoin

Posted on January 10, 2017 | by [email protected]

Bitcoin recorded a surprising crash on Thursday January 5 to halt the expectations that the cryptocurrency will continue its rally to surpass its previous all-time high. Bitcoin had already crossed the $1,100 threshold and it was nearing the $1,200 threshold before it lost its footing. Bitcoin almost dropped to $800 on January 7 and it currently trades around $908 as at 9:27AM EST today.

Many people have tried to find out the reasons for the short-lived rally in Bitcoin prices. Interestingly, the prevailing opinion in the market submits that the People’s Bank of China is behind the unexpected crash in the price of Bitcoin. This piece seeks to examine how China unwittingly orchestrated the crash in Bitcoin prices.

Here’s how China ended Bitcoin’s rally

Bitcoin is already taking up position as a cryptocurrency that could displace troubled fiat currencies and end government interventionist monetary policies. Last week, we wrote on how Bitcoin is already building momentum to displace the Bolivar in Venezuela. Well, the People’s Bank of China made a preemptive strike to ensure that thoughts to use Bitcoin in place of the Chinese Yuan don’t begin to take root in China.

The PBC issued two notices from its Beijing and Shanghai branches emphasizing its position on Bitcoin’s place in the economy. The PBC noted that it considers Bitcoin as a commodity and not a currency and that investors should only trade Bitcoin with the understanding that it carries investment risks. The PBC also requested meetings with Bitcoin exchanges to encourage “self-examination” in ensuring that exchanges stay within the ambits of regulations and that they are managing risks properly.

The more troubling development that caused the price of Bitcoin to tank is the revelation that China’s foreign exchange regulator SAFE was investigating the use of Bitcoin in avoiding capital controls on China. Beijing has placed strict capital controls on the inflow of funds in and out of China but speculators believe that China’s wealthiest are using Bitcoin to bypass those capital controls.

In fact, a decent part of the rally in Bitcoin was fueled by the rumors of an increase in Bitcoin adoption amidst China’s wealthiest. In essence, moves to investigate the use of Bitcoin to evade capital controls could be a precursor to a clampdown on the use of Bitcoin in China. A clampdown on Bitcoin use in China could result in losses for investors; hence, many people have started unloading their Bitcoin holdings.

OKCoins thinks the Bitcoin should be regulated in China

Leading Bitcoin exchanges in China are supporting the government’s plan to push more regulations through the Bitcoin industry in the country. OKCoin is the second-largest Bitcoin exchange for CNY Bitcoin-trading in China – BTCC leads OKCoin in 7–day-volumes. OKCoin revealed that it had had dialogue with the PBC on its plan introduce a third-party platform. The firm however notes that the PBC is yet to make a decision on creating such a platform.

Nonetheless, OKCoin CEO, Star Xu observes that regulating the Bitcoin industry could benefit all stakeholders and that the panic selloff in Bitcoin is unwarranted. In his words,

“The industry can benefit from balanced, risk-based regulation and oversight and we look forward to further constructive discussions with the regulators and industry participants.”