Things have been very quiet on the Chinese front in regards to Bitcoin regulation these past few weeks. More specifically, ever since the country halted all CNY trading, no news has been made public. It now appears the Chinese government may punish OTC trading platforms after all. It seems there will be some major repercussions for all companies facilitating P2P trading between cryptocurrencies and the Chinese yuan.
China Rears its Head Once Again
If China Central Television is to be believed, the future of cryptocurrency in China may look bleaker than ever before. While no exchange is allowed to conduct CNY-based trading as of right now, that may be the least of their problems. CCTV recently aired a special on Bitcoin explaining how OTC trading platforms may violate the financial regulations in place. It would appear the peer-to-peer trading of CNY and cryptocurrencies is of great concern to the government right now.
Moreover, it is evident the OTC trading market for Bitcoin has grown substantially in China over the past few months. A fair few service providers still facilitate exchanges between yuan and cryptocurrency. Unlike traditional exchanges, however, these platforms are still exempt from governmental scrutiny right now. That situation may come to change very soon, according to CCTV. Huobi Pro is one of the platforms facing scrutiny right now, although no official action has been undertaken just yet.
It is unclear why the Chinese government is going after peer-to-peer Bitcoin trading all of a sudden. Many people speculated that the nationwide ban on exchanges facilitating CNY trading was meant to curb capital outflows. Until now, that has never been confirmed by any source, although it remains the most plausible explanation so far. Moreover, there was never any indication OTC trading would be curbed as well, especially in light of the PBoC’s statement in September.
At the same time, one could make the case that OTC trading platforms effectively violate the laws enforced upon centralized exchanges. They also violate the PBoC rule preventing any exchange provider from trading between cryptocurrency and Chinese yuan. It doesn’t matter if they perform the trades themselves or simply facilitate the process; both types of activity are officially prohibited by the PBoC for the time being.
To be sure, not all peer-to-peer trading of cryptocurrency can be deemed illegal. However, if OTC platforms provide clear guides on how to circumvent legislation put in place, that can easily be considered a blatant violation of the law. Whether or not this means Huobi Pro will face any backlash over its business model and how-to guide remains to be seen. So far, no official communication between the government and the company has taken place regarding this matter.
The latest development will only cause more confusion among cryptocurrency enthusiasts in China. Moreover, it raises even more questions as to whether or not China will ever allow CNY-based trading again. For now, that still appears to be the plan, but nothing has been officially confirmed at this point in time. Peer-to-peer trading has become rather popular in China, but that might come to an end very soon. It will be interesting to see how this situation evolves over the next few months.