
China to Shut Bitcoin Exchanges? - verroq
https://www.wsj.com/articles/china-to-shut-bitcoin-exchanges-sources-1505100862
======
mrb
The source for this news story is an anonymous government employee who told
Caixin:
[http://www.caixinglobal.com/2017-09-09/101142821.html](http://www.caixinglobal.com/2017-09-09/101142821.html)

------
mrb
Speculation: It seems China is doing this to replace them all with a single
government-run Bitcoin exchange:

[https://mobile.twitter.com/cnLedger/status/90709502238582374...](https://mobile.twitter.com/cnLedger/status/907095022385823744)

This would allow them to associate an identity behind most inbound and
outbound Bitcoin transactions to/from the exchange...

"Perfect control, classic China" as a Twitter user said.

~~~
em3rgent0rdr
reminds me of scene in Mr. Robot where E-Corp exec is proposing a deal to a
govt official: "With eCoin we control the ledger… and the mining servers. We
are the authority! I will make sure you have visibility into every single
wallet that’s open, every loan, every transaction…"

~~~
kihadi
a single entity controlling a cryptocurrency defeats the purpose of
cryptocurrency. just issue something like amazon credit or whatever.

just one example of how weak the writing is on mr. robot. the basis of
everything must be "Lol hackers bro amirite?"

~~~
MichaelGG
Eh, there have been plenty of "blockchain, but controlled by one entity"
projects proposed. The fact they make no sense and have negative benefits
doesn't stop them from being deployed. Also see zCash's trusted setup which
possibly allows them to mint unlimited money.

~~~
mrb
The Zcash trusted setup was decentralized: multiple persons/entities/third-
parties participated, including Peter Todd who generated his part of the
parameters while driving across Canada with a laptop that was destroyed after
the process... [http://spectrum.ieee.org/tech-talk/computing/networks/the-
cr...](http://spectrum.ieee.org/tech-talk/computing/networks/the-crazy-
security-behind-the-birth-of-zcash)

------
rkagerer
My gut feeling is there's some truth to the rumour. Related resources:

• Original Caixin Report that sparked all this:
[http://finance.caixin.com/2017-09-08/101142797.html](http://finance.caixin.com/2017-09-08/101142797.html)

• ( _RECOMMENDED_ ) Good English translation of above article:
[https://docs.google.com/document/d/1sNYGpwj3EKkRhlejoycytZLq...](https://docs.google.com/document/d/1sNYGpwj3EKkRhlejoycytZLq1OpFpl0bqOtCev0HexY/edit)

• Shorter English announcement from Caixin:
[http://www.caixinglobal.com/2017-09-09/101142821.html](http://www.caixinglobal.com/2017-09-09/101142821.html)

• Coindesk article pointing out Caixin has been spot-on in the past (re their
Sep 2 leak regarding ICO fundraising): [https://www.coindesk.com/report-casts-
doubt-future-chinas-bi...](https://www.coindesk.com/report-casts-doubt-future-
chinas-bitcoin-exchanges/)

• Related official news out of China regarding ICO ban:
[https://www.reddit.com/r/ethtrader/comments/6ywtkt/the_actua...](https://www.reddit.com/r/ethtrader/comments/6ywtkt/the_actual_pboc_news_released_today_pertains_to/)

• Tweet from CEO of ViaBTC saying "China will shut down all exchanges":
[https://www.cryptocoinsnews.com/viabtc-ceo-china-will-ban-
bi...](https://www.cryptocoinsnews.com/viabtc-ceo-china-will-ban-bitcoin-
exchanges/)

It's not the first time China's cracked down on virtual currency <\--> fiat
trading, but if true this could be more intense than their prior efforts.

(Note this is a repost of my comment made to a previous HackerNews article on
the topic)

~~~
vit05
People are acting exactly like people that participate in pyramid schemes.
Denied, saying it is fake, searching for stupid reasons. That is just pathetic
and horrible for the future of cryptocurrency.

Things like this will happen and need to be discussed. It appears that the ban
will be for the trade of fiat for Bitcoin. Everything else, including p2p
trade, will be allowed. So, the price of Bitcoin will fall a little more, but,
eventually, they will find ways to get crypto currency.

Maybe a new coin, maybe more regulations or maybe people2people trades will be
the future. There are already several great products emerging that do not need
exchanges to trade crypto like 0x, Kyber.Network and even Ethertrade.

------
HeavenFox
Given the history of strong government control of economy in China, I am kind
of surprised this didn't happen sooner. Personally, I think the recent ICO
fever is likely the final straw.

In Chinese society, the citizens expect the government to protect them from
harm, whether the government is responsible for them or not. On the other
hand, the government values stability above everything else, in order to
maintain their regime. Now, there's this ICO thing, which has the potential to
scam millions of Chinese (and trust me, it will happen), who will inevitably
protest until their money is returned, you wonder what's gonna happen…

People have received DEATH SENTENCE before for scamming investors[1]. Let that
sink in.

edit: someone mentioned capital control. While I agree this is probably one of
the reasons, I doubt it's the biggest. Sure, having money flowing out of the
country gives the government headache, compared to having thousands of people
on the street holding signs, it seems like a rather minor one. Plus, if you
want to move millions of dollars, you probably won't trust whatever-coin to do
the job. There are tons of ways of doing that, and the government has bigger
fish to fry.

[1]
[https://en.m.wikipedia.org/wiki/Yilishen_Tianxi_Group](https://en.m.wikipedia.org/wiki/Yilishen_Tianxi_Group)

~~~
factorialboy
> In Chinese society, the citizens expect the government to protect them from
> harm

Mao would disagree.

------
pmorici
I would take this with a huge grain of salt. This appears to be a rehashing of
news from last week that China planed to ban trading of ICO tokens. The news
was thinly sourced and it seems like people misconstrued the rumored ICO ban
to mean a general crypto-currency trading ban.

Historically there have been more stories like this than I can count where
some random source claims the PBOC is going to "ban Bitcoin" and it has always
proven to be false. The worst that has happened is the tightening of
regulations on Bitcoin exchange providers. There is even a common meme that
has been going around for years.[0]

[0]
[https://www.youtube.com/watch?v=Ry6PpRXk0dQ](https://www.youtube.com/watch?v=Ry6PpRXk0dQ)

~~~
modeless
> some random source

Sorry, Caixin and WSJ and Bloomberg are not "some random source". I know
"China bans Bitcoin" has been a joke meme in the community for years, but this
time it's the real deal.

~~~
pmorici
Pretty sure this is just a reprint of the same rumors reported in Caixin last
week.

------
probe
One of my favorite questions to ask about this topic is:

"Given what you know today (and how blockchain, cryptocurrencies, and
decentralized networks work), would you still design the financial system and
other systems (ex. identity, currencies, etc) the same way they are designed
today?"

My answer is no, and that's why I'm still bullish on decentralized technology
and systems winning in the long-term. In that case, investments in Bitcoin and
Ethereum are merely call options for an entirely new financial world and a
risk still worth betting on.

~~~
dilemma
Bitcoin isn't decentralized.

~~~
sillysaurus3
This is going to need a lot more text to justify.

~~~
nosuchthing
There's only 3 mining pools, and the dev team has acted anything but
democratic.

The reason for the fork to cash was because the dev team wanted to keep the
network inefficent to benefit miner rewards at the expense of users, along
with justifying the lightning network, with Blockstream having 9+ bitcoin core
developers on their payroll.

~~~
exo762
> the dev team has acted anything but democratic

And? You retain control because you can exit, this is the point of having
cryptocurrency. It is a voluntary process. And for "democratic" development
process... I'm amazed that this point is being brought up. Show me successful
software project that is being "democratically" controlled.

~~~
nosuchthing
The the dev team intensionally cripples their product's service efficiency
when the user base adamantly calls them out for doing so, and meanwhile
several of the core devs are being paid by a company which is developing it's
own fix for the crippled transaction speeds of bitcoin.

~~~
exo762
This is exactly what I was talking about. Ultimately their technical vision is
different from opinions of large group of outsiders, such as you. Allowing you
to input your opinion into the dev process would effectively block it.
Fortunately there is a solution. Bitcoin Core is their software. You, however,
are free to use Bitcoin Cash (exactly that everyone wanted, am I right?). You
are free to contribute to Bitcoin Cash. You are free to start your own
cryptocurrency. Don't like it? Exit.

------
will_brown
How is something defined as distributed and decentralized when it is regulated
by each country? If China tanks the value of the major cryptocurrencies by 20%
with just 2 regulations is a week, isn't the rest just academic?

As everyone saw one day the founder of Ethereum was meeting with Putin and
sending out press releases of potential partnership, the next Putin is putting
out his own press releases questioning why he would ever embrace any foreign
blockchain/crypto, that Russia will launch its own.

If cryptocurrency can be regulated by individual countries like we saw with
china this last week, then I expect the underlying blockchain technology can
be regulated too, and we will begin seeing countries picking winners,
basically who can be a node on the blockchain and who can mine.

People think/thought blockchain equivalent to an automated unregulatable
technology, but once you are talking about billions you impact people with
power, they will raise and lower price at their will and take the people's
technology from them through regulation.

~~~
teknologist
Some government actions drive it up (like what happened in Cyprus for
instance). It seems market participants have got rather attached to this whole
ICO thing as a way to make a quick buck and have lost sight of the original
vision. The wall street-ization of the blockchain.

------
avenoir
I don't follow BTC news often but it seems like anytime the price goes up or
down it is somehow tied to an event in China. Makes me wonder how much of
bitcoin's skyrocketing value is actually based on China's market rather than
natural growth. I guess we'll find out soon. In more positive news, it looks
like Russia is on path to legalize Bitcoin [1]

[1] [https://cointelegraph.com/news/russia-is-working-on-
legalizi...](https://cointelegraph.com/news/russia-is-working-on-legalizing-
status-of-bitcoin-other-cryptocurrencies-rt)

~~~
sillysaurus3
Eh, people were saying the same thing about silk road. Surprise: silk road got
shut down and BTC's price didn't drop at all.

I believe BTC's price is inherently a weighted random walk driven by
speculation rather than rational reasons. Not everyone shares this belief, and
it's human nature to look for explanations when there aren't any.

(An unknowable explanation is still unknowable.)

~~~
bdcravens
> silk road got shut down and BTC's price didn't drop at all

Yes it did: (though I assume you mean over the longer term, but I don't think
that's how most would read that comment)

[https://www.theguardian.com/technology/2013/oct/03/bitcoin-p...](https://www.theguardian.com/technology/2013/oct/03/bitcoin-
price-silk-road-ulbricht-value)

~~~
sillysaurus3
It did not. I was there, and I watched specifically for this. These articles
always get published in response to what people want to believe. If you look
at the data, there was a temporary drop followed by an immediate recovery.

The article even says this:

 _On Wednesday afternoon the price of one Bitcoin (BTC) was $145.70 on Mt Gox,
one of the largest exchanges for the currency.

After the news that Ross Ulbricht had been arrested and the Silk Road site
seized, the exchange rate plummeted to a low of $109.76, before recovering to
$124.00 late on Thursday._

Translation: "BTC went from $145 to $124 and then continued to go up."

~~~
bdcravens
I was there as well. People were freaking out on r/bitcoin and elsewhere.
There was an immediate response. The price recovered, but a drop from $145 to
$110 (a 25% drop) shouldn't be hand waved away.

~~~
sillysaurus3
It wasn't a 25% drop, it was a 15% drop which isn't uncommon. This is Bitcoin.
It was followed by an immediate recovery.

~~~
bdcravens
Sure, if you pick the price point of $124. I agree, Bitcoin is filled with
tons of swings and volatility. I was merely addressing your comment "silk road
got shut down and BTC's price didn't drop at all" which is quite inaccurate.
I'm a big Bitcoin proponent myself, and don't think we do anyone any favors by
painting a false picture. (or to be more generous, keep moving the goal posts)

~~~
sillysaurus3
The price dropped for one day. That does not count as a drop. Pull up the data
and show that it dropped longer than a day and then I'll agree that it
dropped.

How far are we going to zoom in to say that BTC dropped? An hour? A minute? A
day is not a useful time interval.

Using the lowest point of the day also isn't useful. Traders typically use a
moving average. Neither the lowest nor the highest peak is a useful way to
compute the price of bitcoin for the day.

If you're going to wag your finger and say "Nu uh" and trot out data saying
that it went down to X price, well, yes, you're _technically_ correct. But I
think most people would agree that the price over the next week is a far more
useful way to know whether the price truly dropped or not.

In other words, if China's ban results in BTC dropping for a day, who cares?
No one.

~~~
bdcravens
I think you'll agree there's a huge bias in Bitcoin dialog. Peaks are
indelible truths, but dips always have asterisks. Let's flip your comments
around:

"The price went over $5000 for one day. That does not count as a peak." "Using
the hightest point of the day also isn't useful. Traders typically use a
moving average. Neither the lowest nor the highest peak is a useful way to
compute the price of bitcoin for the day." "If you're going to wag your finger
and say "Nu uh" and trot out data saying that it went up to X price, well,
yes, you're technically correct. But I think most people would agree that the
price over the next week is a far more useful way to know whether the price
truly went over $4900 or not." "In other words, if BTC went over $4900 for a
day, who cares? No one."

Yet in any conversation of price, that $5000+ ATH is the watermark.

~~~
sillysaurus3
Peaks have never been a useful benchmark of Bitcoin health, and I don't know
where you're getting that from. Your thoughts on Bitcoin are basically being
driven by popular media, and popular media is a terrible way to judge
anything.

I've already responded to your points, but let's rehash it again: Silk road
closed, and everyone expected BTC to completely fucking fail. It did not. In
fact, it barely went down. It also recovered swiftly.

If you want to call that a drop, go ahead! Personally, I'd save that
classification for when BTC dropped from $1100 to $300, for example. But sure,
a 15% decrease for one day followed by a recovery over the following week
could count, I guess.

~~~
bdcravens
> Peaks have never been a useful benchmark of Bitcoin health, and I don't know
> where you're getting that from. Your thoughts on Bitcoin are basically being
> driven by popular media, and popular media is a terrible way to judge
> anything.

Most of my thoughts are driven by what passes for dialog at r/bitcoin and
elsewhere in the community. To the moon! This is gentlemen! rollercoaster.gif!
I would definitely agree that listening to hyperbole, wherever it comes from,
is foolish.

------
SeoxyS
For anyone wondering how BTC is used as a way to evade Chinese currency
controls, I just came to this realization today: people aren't buying bitcoin
locally to send it out of the country: they're buying cheap coal electricity,
using it to mine bitcoin, and then liquidating that in foreign exchanges.

~~~
omarchowdhury
This realization is incorrect. The amount of BTC generated globally[1] per day
is minuscule compared to CNY/BTC volume[2]. Besides, they're selling the BTC
they mine for more yuan.

[1] $7M [2] OKCoin.cn alone does $100M a day on the BTC/CNY pair.

~~~
SeoxyS
That CNY traded in China remains stuck in China. Whoever sold the BTC for CNY
now has to deal with the restricted currency

Presumably most of that BTC/CNY trading is being traded for capital gains, not
as a way to try to evade currency controls.

------
vit05
"The country’s central bank has led a draft of instructions that would ban
Chinese platforms from providing virtual currency trading services, according
to people familiar with the matter. The move comes after months of scrutiny by
Beijing, including a ban last week in China on initial coin offerings, a kind
of fundraising via virtual currencies.

Regulators in China have been investigating the domestic market for bitcoin
and other virtual currencies since the beginning of the year. For a while,
officials considered enacting antimoney-laundering rules on exchanges, even
circulating a draft of such rules for them to follow."

OkCoin prices are still going up. The only "important" person that has said
this would happen was the VIABTC CEO on twitter. Nobody believes, but now, I
think is true

------
l1feh4ck
>>To Read the Full Story Subscribe or Sign In.

Forcing users to Subscribe or Sign In to read the content while allowing the
search engine crawlers without any barriers should be considered as
malpractice. This was exactly the kind of stuff Quora was doing but at least
they had the decency of doing this on users coming from internal links.

~~~
modeless
They don't let the crawlers in either. Do a search. You'll see the snippet
only contains the same part of the article you see before the paywall.

------
option_greek
Good luck banning or controlling Bitcoin - especially when there is a
satellite streaming down blockchain. I understand their motive though. Large
sums of money can be used for anything. Including regime change or coup.

~~~
prostoalex
> especially when there is a satellite streaming down blockchain

If a satellite link can bypass government controls, why has it not been used
by Google, FB, New York Times and numerous others banned in China?

~~~
jMyles
Do you really think comparing interactive web apps, which require a bunch of
complex di-directional traffic, with a blockchain, which just needs to be
routinely copied from a uni-directional source, is fair?

~~~
prostoalex
Fair enough on Google and Facebook, but my traffic with NYT is pretty uni-
directional.

~~~
jMyles
That's what you think. ;-)

------
wallacoloo
One of the touted benefits of bitcoin and related cryptocurrencies is the fact
that transactions on such networks cannot be easily censored, even though not
many people experience this kind of thing directly with classic currencies.
Therefore, I find it amusing that a prime example of why we need non-
censurable currencies is provided by the difficulty of exchanging them in the
first place.

~~~
panarky
_Analysts say more activity is moving underground, where individuals can send
virtual currencies to each other using private addresses, which serve like
safe-deposit boxes._

 _Regulators will likely to have to tolerate noncommercial trading of virtual
currencies. “The government also doesn’t have the power to control” that._

\---

Centralized exchanges have always been the achilles heel of cryptocurrency
ecosystem.

Better to keep it distributed with (a) smart contracts and (b) lightning
network.

------
tudorconstantin
It would be interesting to see how this unravels from a game theory
perspective. Right now the crypto coin market cap is at around 150 billion USD
(up from 15-18 bn in january this year). Not a huge amount by any means when
compared to a big country's GDP. The daily traded volume is about 5-10
billions.

If China bans the exchanges now, they basically opt-out from the value created
by the flow of some of these billions. Sure, the prices and daily volumes
would drop on the short/medium term, but this would only give one last chance
to people left out to join and buy crypto at low prices. When the market cap
and prices would grow back, China would be left out. Who would trust them
anymore to start a blockchain business there?

~~~
alextheparrot
It is also possible that a component of Bitcoin's value is transferring money
out of China, in which case prices may start to reflect this decrease in
utility.

------
chj
Since BTC is an efficient way to pump money out of China, this will happen
sooner or later.

------
dgut
What we need is a fully decentralised and uncontrollable Internet. It can't be
wireless, that's too slow (limits of physics), and jamming it too easy. We
need to actually dig our own cables, those are untraceable, and they'd have to
cut one by one. OR we could probably leverage power lines, as much as I hate
introducing noise into those. There is no 100% foolproof software solution
given the current state of the net.

------
acty1
That's why we need decentralized exchanges like www.ether.bid based on 0x
protocol

~~~
bdcravens
This would only let you exchange for tokens, right? 95% of the trading public
won't give anything a look if you can't trade for fiat.

------
sillysaurus3
No paywall: [http://archive.is/i0PFc](http://archive.is/i0PFc)

------
rkagerer
Looks like there's a brand new article, behind a Caixin paywall. Does anyone
here have access to it?
[http://www.caixinglobal.com/2017-09-11/101143673.html](http://www.caixinglobal.com/2017-09-11/101143673.html)

------
seizethecheese
Sell! Sell! Sell!

------
knodi
time for a BTC crash.

~~~
bdcravens
I think much of what the WSJ is reporting was reported over 24 hours ago, and
there was a bit of a dip at that time. Most movements in BTC happen before MSM
reports on it.

------
sjcsjc
One-party communist state opposed to free-market financial innovation.

In other news, water is wet.

