Regulation Archives

Why Increased Regulation in the Crypto Space Is a Good Thing

Posted on April 2, 2018 | by [email protected]

In the wake of crypto’s newfound popularity, traditional regulators have begun to take notice and are proactively implementing safeguards to protect investors. Meanwhile, private companies have also stepped up to protect consumers from misleading advertising.

Those who liked the “Wild West” days of crypto may balk at the new constraints, but in the big picture, this increased regulation from traditional parties can be seen largely as something positive, as it is indicative of the currencies’ staying power and path to mainstream adoption.

Here’s a quick look at what’s happened recently, and more insights into why these events predict good things for cryptocurrency.

SEC Requires Exchanges to Register

In early March 2018, the Securities and Exchange Commission (SEC) issued a statement that said all exchanges that trade digital assets which are considered securities must register with the regulator. “Many platforms refer to themselves as exchanges, which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange,” the SEC wrote, providing context surrounding the increased regulation.

Ultimately, requiring that each exchange register with the SEC provides a necessary layer of oversight that will protect investors from illegitimate platforms or scammy ICOs, which is particularly important in light of several major hacks reported over the course of the last year. While the increased regulations have likely contributed to Bitcoin’s market dip in the past month, these new initiatives are in the consumer’s best interest for the long term.

Chairman of the U.S. Commodity Futures Trading Commission CFTC Christopher Giancarlo proposed an approach to regulating cryptocurrencies that strikes a balance between providing necessary oversight while recognizing the promise and possibility of new innovations. “I believe that ‘do no harm’ is the right overarching approach for distributed ledger technology…With the proper balance of sound policy, regulatory oversight, and private sector innovation, new technologies will allow American markets to evolve in responsible ways and continue to grow our economy and increase prosperity,” Giancarlo said.

Financial Stability Board Announces No New Regulations

In March, the Financial Stability Board, a global organization that oversees international regulations for G-20 economies, announced that “crypto-assets do not pose risks to global financial stability at this time.” This announcement offered reassurance for both the crypto and non-crypto community alike at the national level, and reinstated the fact that cryptocurrencies are very much a part of the national conversation.

Social Media and Search Engines Limit Crypto Ads

In January 2018, Facebook announced it would no longer allow ads promoting cryptocurrency or ICOs. Rob Leathern, one of Facebook’s ad directors, said that the policy was intentionally broad while the Facebook team works to implement better internal processes to detect deceptive advertisements. In March, Google announced a similar ban that will go into effect in June of 2018. Ultimately, these crackdowns will also provide necessary protections for consumers navigating the space.

“We applaud the efforts being made by Google and Facebook. These consumer protection measures will weed out fly-by-night companies, illegitimate ICOs and scams. As a result, users will easily navigate through legitimate companies like BitcoinIRA.com without the noise or confusion of unscrupulous companies,” said BitcoinIRA.com Chief Operating Officer Chris Kline.

BitcoinIRA.com Hired a Compliance Officer to Streamline Regulation Processes

BitcoinIRA.com, the world’s first and largest cryptocurrency IRA company that allows customers to purchase Bitcoins and other cryptocurrencies for their retirement accounts, is committed to honoring all compliance and regulatory initiatives. In fact, the company recently appointed Maryann Bullion as its General Counsel and Senior Compliance Officer. “At BitcoinIRA.com we are very much encouraged by the regulators’ involvement setting standards for protecting consumers in the cryptocurrency space and by ensuring a safe and sound financial services industry,” Bullion said.

To learn more about how BitcoinIRA.com can help you meet your retirement goals, give one of our IRA specialists a call today at 877-936-7175.

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New Florida bill targets Bitcoin Money Laundering: A progressive step or a regressive measure?

Posted on April 24, 2017 | by [email protected]

One of the prime reasons why embedding Bitcoin in our daily life has become very difficult is owing to the fact that we are not equipped with the technology to monitor the transactions. Even if we do, taxation on these transactions will be complicated and would require more than just mapping the profits/exchanges between individual persons. With Bitcoin ecosystem still in its nascent state and governments still finding a way to put in place the perfect regulatory framework, the privacy of the network will be an aid for money laundering. Owing to this, Florida lawmakers are considering a new legislation that aims to stop virtual currency dealers who indulge in money laundering activities. The bill, sponsored by Miami-Dade Representative Jose Diaz, has already passed through the state’s House Appropriations Committee. Let’s dive deep into the details of the bill and its implications:

The bill for virtual currency money laundering:

Monetary concealment has been a major problem for many states across US, that has called for severe measures to stop the illicit activity. For Florida, the need for such a measure arose with the case of Michel Espinoza, a man charged for selling $1,500 worth of illegally transmitted bitcoins to undercover police. However, Espinoza’s case was dismissed because the judge considered bitcoins as a form of property. The officials weren’t pleased with the result of the Espinoza trial and are appealing the judge’s decision. Hence the bill that is being supported by the Miami-Dade Cybercrime unit will describe Bitcoin as a “Monetary Instrument” which allows them to prosecute criminals using virtual currencies for money laundering.

Miami-Dade State Attorney Katherine Fernandez Rundle said:

“This legislation makes sure that traffickers and fraudsters can no longer try to use internet-based currencies to hide and move their ill-gotten gains”

Bitcoin statuses differ across US:

The current Florida law defines “monetary instruments” as coin, US or foreign currency and checks. If the bill passes, it will mean that Bitcoin would be added to the definitions of “monetary instruments” under Florida’s money laundering act. Each state of US has different definitions for Bitcoin and that is due to lack of better resources for monitoring. The lack of general consensus amongst the states has made legal issues very painful to handle. One such ambiguity is the Anthony Murgio lawsuit where the judge declared Bitcoin as money. The Federal Judge Alison Nathan stated:

“Bitcoins are funds within the plain meaning of that term — Bitcoins can be accepted as a payment for goods and services or bought directly from an exchange with a bank account. They therefore function as pecuniary resources and are used as a medium of exchange and a means of payment”

Would this prove out to be detrimental to Bitcoin:

While recognizing Bitcoin as a monetary instrument is a big positive for the cryptocurrency as it means the currency has indeed achieved mainstream adoption, the step might have negative implications. The move comes out of necessity to regulate the cryptocurrency in cases of money laundering. This might paint a general opinion that the currency has been used too much for money laundering which is actually not the case. Reports suggest that terrorist funding and money laundering are more prevalent through actual cash than any cryptocurrency. However, this is would be one of the first steps to diligently regulate the cryptocurrency and hopefully promote adopting it on an institutional scale.

SEC Denies SolidX for Bitcoin ETF Listing, Bitcoin Prices Unaffected

Posted on March 28, 2017 | by [email protected]

The second week of March witnessed heavy drama in terms of Bitcoin price, swaying fundamentals thanks to the pending approval of Winklevoss ETF. The SEC set the date of verdict on 10th March, before Bitcoin prices rallied anticipating the ETF approval. Nevertheless, Securities and Exchanges Commission decided to reject the proposal, causing a drop in prices and heavy market volatility. Last week of March has seen another Bitcoin ETF proposal being rejected but the markets remained unscathed due to this decision. SolidX was planning to launch their Bitcoin ETF(Electronic Traded Fund) on the New York Stock Exchange. Let’s look into the reasons SEC gave for the rejection of the proposed ETF:

Reasons for Rejection

With SEC ruling out the Winklevoss ETF, speculators were sure that since Bitcoin is relatively new and not well regulated, SEC would cite the same reason for rejecting SolidX’s ETF listing. This turned out to be true and as in the case of Winklevoss ETF, SEC listed the following reasons for rejecting Solidx’s claim:

“The Commission believes that, in order to meet this standard, an exchange that lists and trades shares of commodity-trust exchange-traded products (“ETPs”) must, in addition to other applicable requirements, satisfy two requirements that are dispositive in this matter. First, the exchange must have surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.”

What this means to Bitcoin

The main reason why SEC cited for the rejection was that Bitcoin markets are unregulated. With Bitcoin transfers being instant and decentralized, monitoring and regulating the Bitcoin markets is a herculean task. Very recently Node40 has launched software to monitor Bitcoin transactions and calculate the taxes for Bitcoin gains and losses. With good time, we can surely expect methods to regulate Bitcoin markets to effectively come up with a regulatory framework that is easy to operate. An ETF would surely take Bitcoin towards mainstream adoption on par with different investable asset classes. But by the SEC’s standards Bitcoin is not ready for an ETF yet as it would require a well-regulated ecosystem.

Price goes unaffected

After the much hyped Winklevoss ETF decision affected the Bitcoin markets, with a lot of wagering over the Bitcoin prices, people have chosen to ignore the effects of SolidX EFT decision. The Bitcoin market prices were steady and went up by $35 after the decision was made public. This shows the growing immunity Bitcoin has been amassing to mainstream cryptocurrency fundamentals. Such character has been displayed even while Chinese Exchanges decided to ban withdrawals which had a very acceptable impact on prices.

Why South Korea’s Bitcoin adoption might turn the volume tables this year

Posted on March 16, 2017 | by [email protected]

‘2017’ saw a monumental shift in terms of Bitcoin volumes, where growing cryptocurrency adoption has risen significantly over the past year. The opportunity to recognize their contribution to the Bitcoin volumes and their growing adoption was provided when Chinese Exchanges started imposing transaction fees on their trades. The volumes dwindled significantly and the Exchanges’ decision to ban withdrawals came as the final nail in the coffin. While things were looking rough for Bitcoin, other Asian countries stepped up with unbelievable adoption levels and supported the currency prices. While Japan has been the fore-runner, another country that went unnoticed in this bid would be South Korea. Let’s delve deep into Korea’s Bitcoin story:

The remittance market:

The remittance game has been strong with South East Asian countries as they capture 60% of the remittance market in the world. The South Korea-Philippines corridor hosts remittances startups that bank on Bitcoin to make the transfer. This has earned the startups a popular nickname called ‘Rebittance startups’, whose number has been increasing significantly in South East Asia. Most of the startups aren’t even present in the country but make rebittances possible over messaging apps like Facebook messenger and Viber. The Korea-Philippines corridor covers 20% of South East Asian remittances and are cheap when compared with Western Union or other traditional cross border transfer methods.

The efforts of Korbit:

Korbit is the first South Korean Bitcoin exchange that has worked relentlessly for mainstream adoption of the cryptocurrency. The exchange has 33,500 registered Bitcoin users with and is one of the top two exchanges by volume. The exchange offers a unique service called ‘Hyphen’ where businesses can send payments to any bank account in over 30 countries globally using Bitcoin. South Korea is the hub of tech startups that have revolutionized payments sector and fintech. Hence Bitcoin adoption hasn’t picked up significantly in the past but thanks to the efforts of Korbit, things are changing now quickly.

The regulations framework:

The Korean government has been very cooperative when it comes to Bitcoin and other cryptocurrencies. The Financial services committee has been considering to launch a cryptocurrency of the state that would facilitate transactions and strengthen the Fintech network. They are planning to propose a regulatory framework for Bitcoin based businesses in 2017 and monitor the currency’s movements in and out of the country. For a country with an annual remittance measure of $6.7 Billion, Bitcoin with encouraging regulations in place would be a good catalyst for growth.

Bitfinex moves out of Washington State citing regulatory problems

Posted on March 7, 2017 | by [email protected]

Regulations, especially not well thought out might be a hindrance to innovation in any form. Such constricting regulations are hindering the development of fintech companies currently in US. The latest state to join this list is the State of Washington where regulations on digital currency startups have made significant impact on businesses. Owing to these regulations many companies have ceased to serve the residents of the respective region and Washington is no different. The latest to join the list of exchanges pulling out of the state would be the Honk Kong based exchange Bitfinex. After suffering a massive hack in August, Bitfinex has managed to reimburse the stolen money to their clients through redemption tokens and was able to re-establish client’s faith in the exchange. Though the strong reason behind this move is still unclear, let’s look into the details of the exit:

The Regulatory debacle:

A Washington based user has revealed on Reddit that Bitfinex has withdrawn from the State owing to a regulatory debacle which it eventually lost. The statement released by the exchange read as follows:-

“Over the past few months, we have been in discussion with representatives of the Washington State Department of Financial Institutions(DFI) about Bitfinex’s business and specifically to provide Washington customers with service. DFI representatives have made it clear that for offering the services, Bitfinex has to acquire a state money transmitter license.”

Bitfinex’s problem:

The exchange underwent a massive hack attack in August 2016, losing more than $70 Million after which there have been facing consistent trouble. The exchange issued blockchain debt tokens to its users in August as a way to pay them back for losses it incurred in a debilitating hack. The exchange announced that it would purchase the tokens at an above-market value of $1 each. This is roughly double the market value when the redemption took place. The exchange has been good on its promise so far but they have experienced a DDOS attack pretty recently which has been fended off.

Regulations and Bitcoin businesses:

Bitfinex notified that it wouldn’t be obtaining the money transmitter license in Washington and, accordingly, will no longer be doing business with verified Washington customers, effective immediately. Washington-based traders have only until Wednesday to withdraw their funds, Bitfinex added. Earlier last week Coinbase suspended its services for customers in Hawaii owing to authorities intervention. Early December last year, Bitstamp also left Washington State citing regulatory reasons. The problems with regulation for cryptocurrency startups started with BitLicense NewYork which saw the mass exodus of the startups from the state. Whether regulations and business would be able to find a middle ground in US where the innovation would get a push rather than hampering is to be seen.

Did Bitcoin finally slay the dragon?

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

Just a couple of months ago, China was a major fundamental driving factor for cryptocurrencies. Bitcoin price fluctuation is a flagship example of how one of the world’s biggest economies can manipulate the markets at will. Whether what has transpired was helpful or hindering for Bitcoin growth is debatable, it surely did have staggering effects on the cryptocurrency’s interesting journey. With PBOC’s intervention in the activities of major Chinese exchanges for the past three months, Bitcoin prices have been experiencing heavy volatility. But after Bitcoin markets took repeated blows, finally when the Chinese Bitcoin exchanges announced ban on withdrawals for a month, the price drop impact was relatively lower than expected. But it is evident that the prices sustained because the volumes were manifested elsewhere. Let’s dive deep into how adoption has beaten Chinese supremacy in Bitcoin markets:

The Chinese grip:

For a long time, China has had good control over Bitcoin with over 96% of Bitcoin volumes coming from China. With PBOC’s policies of devaluation of Yuan to increase the return on the imports, investors looked up to Bitcoin as a hedging instrument. Also, automated trading dominates the Chinese volumes owing to the zero transaction fees. With PBOC’s restriction and tightening grip over the activities of the exchange, things looked ominous for Bitcoin’s bullishness. But before China could do further damage, things stabilized and the prices regained traction.

The adoption and the towering expectations:

With exchanges shutting down withdrawals, there was a significant drop in volumes. This was immediately covered by the new found heavy adoption in Japan at merchant and institutional level. Bitcoin legislation in Japan turned favorable with the abolishment of 8% sales tax that attracted Chinese automated traders immediately after the exchanges levied transaction fee. With realistic policies and good regulations, Japan, South Korea, Singapore and the Philippines are handling increasing volumes easily and effectively. The start of 2017 marked a tectonic shift in the Bitcoin ecosystem. China’s authority over Bitcoin slipped away with increasing and probing regulations. This manifested in other Bitcoin markets which reflects the currency’s growth.

The prices are mooning owing to the speculations over Winklevoss ETF. If the ETF is approved we can surely see the currency sky rocketing by mid 2017.

ESMA dismisses rumors of Blockchain ban and refrains from premature regulation

Posted on February 14, 2017 | by [email protected]

The greatest hindrance to the development of innovation into a full-fledged functioning concept is the chain of regulation that hampers it. Blockchain enthusiasts and major tech giants have heralded ledger based technology as path breaking and something that holds great potentiality in terms of applications. This has resulted in a host of Fintech startups taking interest in Blockchain and developing applications that can replace the existing legacy modules. Europe has been one of the central hubs of such innovation and the growing turmoil involving various Geo-political-economic issues has only helped the cause. Recently, Bitcoin.com reported on European Securities and Markets Authority (ESMA) opinion to ban blockchain platforms. However on Feb 7^th, ESMA released a report contradicting the post. Let’s dive into further details of the report:

ESMA considers Blockchain regulation premature:

The European market regulatory agency has revealed that Blockchain Technology is in its nascent stages and regulating it would be premature. This could be deduced owing to the news that EU itself is thinking of launching crytpotcurrency wallets based on ledger technology. With Blockchain Technology facilitating for transactions in quick time and easing the way transactions can be verified across borders, EU considers regulation at such an early stage might hurt the innovation.

Building the framework for later stages of Regulation:

The Distributed Ledger based technology is currently being used for rewriting financial transactions in the most simple and efficient way. Apart from transactions, many firms have already employed Blockchain in post trade processing as it offers reduced costs. Since financial transactions and trade processing do require good amount of compliance, monitoring such support framework has to be made easy. Hence major efforts would be directed towards building a framework that supports Blockchain technology and also ensures regulation in financial transactions.

Why regulation would be important in the future:

It is true that regulation cannot understand or catch up with the speed of innovation but at the same time, it is very important to respect the safeguards that are put in place for every system in the form of regulations. Looking forward it is evident that Blockchain would play a major role in Transactional economics, post trade processing, identity verification and tracking of resources on a broader scale. With good amount of disruption to come, it is imperative that regulation that will monitor the technology is to be in place. Hence ESMA believes that the industry should work towards solutions to address the challenges posed by technology for keeping in mind the future consequences.

Chinese Bitcoin Exchanges Impose 0.25% Fees To Appease Regulators

Posted on February 8, 2017 | by [email protected]

Bitcoin investors might want to pay more attention to developments in China going forward because the Bitcoin industry tends to catch a cold every time Chine sneezes. China is one of Bitcoin’s biggest markets and the cryptocurrency has an impressive adoption and market penetration in the country. In fact, analysts have submitted that Chinese Bitcoin exchanges recorded about 42% of Bitcoin transactions globally in 2016.

In the last couple of weeks however, Bitcoin has been facing increased pressure stemming from the Chinese government’s efforts to put a muzzle on the use of Bitcoin in the country. The People’s Bank of China (PBOC) has said that it considers Bitcoin as a commodity (probably on par with gold) and not a currency. The PBOC also hinted that it would step up its regulatory oversight on the use of Bitcoin in the country. The development in China caused Bitcoin to lose its footing from around $1100 to its current $923 trading price.

China’s Bitcoin exchanges impose trading fees to appease regulators

Breaking news on Monday (January 23) shows that Bitcoin exchanges in China are trying to appease regulators by charging a 0.2% fee per Bitcoin transaction starting on Tuesday (January 24). The three biggest Bitcoin exchanges in China, BTCC, Houbi, and OKCcoin have all released statements on their intent to start charging 0.25% per transactions. All the three exchanges in separate statements noted that the reason for the charges is to “to further curb market manipulation and extreme volatility.”

At the start 2017, the People’s Bank of China has called for stricter regulation on the use of Bitcoin in China. The PBOC said it would start investigating Bitcoin transactions in order know the extent to which the cryptocurrency is being used to aid illegal transactions such as money laundering. Of a truth, many people in China are using Bitcoin to evade the country’s draconian laws aimed to stopping capital outflow from the country.

However, the increased adoption of Bitcoin for transactions and payments at lieu of the Chinese Yuan has reduced the demand for the Yuan and the Yuan is under pressure in the forex markets. For instance, in 2016, the Yuan CNY=CFXS declined 6.6% against the USD to mark its weakest full year performance since 1994. Hence, it doesn’t take much analysis to deduce that the PBOC is mounting pressure on Bitcoin in order to reduce interest in the cryptocurrency.

How far will China’s exchanges go to please regulators

Chinese authorities are worried (and with good reason) that people are using Bitcoin to move their wealth out of China. Hence, they have a strong enough motive to frustrate Bitcoin users in the country. Bitcoin exchanges are businesses and they must remain in the good books of the government to succeed especially in places like China where the government lords it over all.

In addition to the transaction charges, the three biggest Bitcoin exchanges in China have also stopped leverage trades that allow people to do something akin to margin trading with Bitcoin. The ending of leveraged trades will also reduce the speculator element in Bitcoin transactions.

The fact that the exchanges all decided to start charging 0.25 transaction fee (on the same day) suggests that the move was a coordinated action even though the exchanges have avoided hinting that they made the decision under duress. Hence, we can submit that the exchanges won’t mind caving in to some of the demands of regulators inasmuch as the demand would help them stay in business even if it causes a ‘little’ inconvenience for their clients.

Bitcoin crashes as China acts up on regulations

Posted on January 11, 2017 | by [email protected]

What has been in the air surrounding Bitcoin and China from the start of the New Year has indeed been confirmed on 11^th of January. Rumors about China moving forward with regulation and capital controls on Bitcoin are proven to be true. While the volume from Chinese exchanges remained fairly constant or increased, the price of Bitcoin took a hit. These regulations will need a good 2-3 years for formulation and taking complete effect. But the news came as a shock to the market and has seen the market reacting very adversely. The price has dropped to around $750 with little support. Let’s diagnose the crash and what we can expect further from here:

When did this start?

Chinese economy is a credit fueled economy and they have observed that the currency generated has been steadily finding its way out of the country. With patterns where Bitcoin prices increase with Yuan devaluation, they have figured out that Bitcoin was the medium. To confirm the same the authorities have closely monitored the digital currency with thoughts of regulating it. China as such has strong capital controls and conversion of local currency into foreign currency is well regulated. However Bitcoin having a peer to peer nature doesn’t get accounted in these regulations. Hence Chinese authorities have decided to employ strict capital controls over Bitcoin. These measures require identification and completion of detailed forms to convert yuan into Bitcoin or invest in Bitcoin.

How is PBOC regulating?

China’s financial regulators are reportedly seeking opinions on how to regulate the trading of bitcoin and have contacted the exchanges on the same. One of the proposed methods may include setting up a depository platform. Chinese exchange BTCC – one of three leading bitcoin trading platforms spoke to by the People’s Bank of China last Friday. They have explicitly stated that they adhere to “strict AML/KYC policies and it’s not possible to evade the capital controls through their channel”. With Peoples Bank of China probing deeply into matters, we can expect strict regulations to be implemented very soon.

Diagnosis and predictions:

Bitcoin has been trading at peak prices after a sustained bull run last year. During this time, many investors moved their funds into the digital currency for long term holding. With the fears triggering a complete crash, most of the investors decided to exit the market furthering the price drop. With the price now lingering around $760, we can see one of the following two things happening.

Bullish side:

If the price consolidates and moves up with momentum and breaks the all the time high, then Bitcoin can head straight to $2000 levels within the next couple of months.

Bearish side:

On the Bearish side, $560-$600 range is a heavy support zone that held the prices on multiple occasions. Once market breaches these levels, a strong crash taking Bitcoin to $250 can be expected.

How the market would choose to react now and what side Bitcoin decides to rally again, only time will tell.

The Chinese look to impose capital controls over Bitcoin, a hiccup to the Bull Run?

Posted on November 4, 2016 | by [email protected]

When it comes to countries and cryptocurrencies, China and Bitcoin share a relationship similar to estranged lovers. China has a credit fueled economy; Bitcoin had a period of stagnated growth. Chinese used Bitcoins to escape the debt trap and this in turn boosted the growth of the cryptocurrency. The price of Bitcoin almost tripled (from $220 to $730) in a year thanks to the Yuan devaluation. While this is convenient to the proponents supporting the currency, the Chinese government sees this as a threat to the economy.

The Hostility:

China has dominated Bitcoin mining and trading domains for some time now. The widespread use of the digital currency has led the Government to initiate regulations to monitor Bitcoin. In 2013, the government classified Bitcoin as a commodity threatening its status as currency. This placed Bitcoin outside the purview of the foreign exchange regulator. People’s Bank of China and financial regulators made it a point to specify that bitcoin functioned as digital commodity only. Owing to the success of the cryptocurrency, the government itself was looking into possibility of its own national digital currency. In 2013, finally China moved to ban Bitcoin barring all financial institutions from handling Bitcoin transactions.

Capital Control:

Capital control represents any measure taken by a government, central bank or other regulatory body to limit the flow of foreign capital in and out of the domestic economy. These controls include taxes, tariffs, outright legislation and volume restrictions, as well as market-based forces. Capital controls can affect many asset classes such as equities, bonds and foreign exchange trades. As mentioned earlier, China has a credit fueled growth, which implies that it is important that they ensure the value of money is intact. This can only be assured by implementing Capital Control over certain assets.

Government to make the move soon:

According to Bloomberg, Chinese regulators are looking into measures for limiting Bitcoin transactions taking the funds out of the country. The policies include restricting domestic bitcoin exchanges from moving the cryptocurrency to platforms outside the nation. Also would be in place quotas for the amount of bitcoins that can be sent abroad.

The measures were triggered when investors bought bitcoin on local exchanges and sold them offshore evading taxes. Whenever the Yuan depreciated, there was heavy inflow of funds into Bitcoin as means of hedging. With U.S. interest rate hike around the corner, policy makers are trying to restrict the outflow of funds with Yuan weakening. When the measures will be implemented, growth of Bitcoin will surely face little discomfort.