
Two of China's Biggest Exchanges Stop Bitcoin Withdrawals - joeyspn
http://www.coindesk.com/two-chinas-biggest-exchanges-stop-bitcoin-withdrawals/
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contingencies
So basically, reading between the lines as a long term China resident and also
the first employee of a major US cryptocurrency exchange, the Chinese
government's 人民银行 ( _renminyinhang_ ; People's Bank) has met with domestic
exchanges and requested immediate additional processes on withdrawls. These
probably include government reporting and/or blacklist processing. Since US
exchanges are already subject to AML/KYC processes, this merely brings Chinese
exchanges roughly in line with their US counterparts. I can see nothing to
imply any additional restrictions so far.

Zooming out a little, there is good reason to believe that the Chinese
government is less afraid of Bitcoin than the US, because Chinese mobile
payment penetration through wholly owned systems (mostly WeChat) is already
near 100%. Domestic transactions are therefore pretty much safe from
Bitcoin... which offers slower settlement with more hassle on a much smaller
range of goods and services. Also, relative to the US, taxation is very low
and easily calculable across all of China (regardless of product type, buyer
and seller location) so the appeal of Bitcoin for shortcutting that overhead
is not present, as it is within the US with its famously antiquated multi-
state tax nexus conundrums.

~~~
Markoff
removing Bitcoin withdrawal means basically stop to capital outflow which
could be circumvented by using Bitcoin instead of RMB, this just put Bitcoin
in line with RMB and make it more difficult to get money out of China

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vkou
It seems that contrary to discussion in yesterday's bitcoin thread [1], this
is not 'unnecessary FUD.'

[1]
[https://news.ycombinator.com/reply?id=13601083&goto=item%3Fi...](https://news.ycombinator.com/reply?id=13601083&goto=item%3Fid%3D13600249%2313601083)

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chollida1
I'm not sure if this is good or bad.

On one hand, having the government lay down a set of rules for the exchanges
to follow could be seen as a stabilizing force.

On the other hand, it also, in my mind, increases the likely hood that if the
government becomes unhappy with the exchanges that all the exchanges will be
shutdown at once, which isn't great for bitcoin.

Big question I'd like answered.....

If I hold bitcoin, I'd do some very serious looking into what happens if most
of china's exchanges and miners suddenly are brought off line for a couple of
weeks.

I'm mostly interested in the secondary effects.

\- ie will it lead to mass redemptions at other exchanges?

\- which exchanges are fully cashed up? and which are working with fractional
cash reserves?

~~~
lightedman
"If I hold bitcoin, I'd do some very serious looking into what happens if most
of china's exchanges and miners suddenly are brought off line for a couple of
weeks."

As much as I don't like bitcoin, there is one bit of robustness built-in. If
China were to shut down all of the exchanges and farms, the balance of hashing
power for the bitcoin network would essentially leave China and be split
between the remaining connected exchanges. This would hurt yuan/bitcoin rates,
but would probably stabilize rates for the rest of the world economies
attempting to utilize it.

~~~
adamu__
If China were to shut down bitcoing mining, my understanding is that the worst
case scenario is much more dire. The network only adjusts the 'difficulty'
relative to current network hash power every 2,016 blocks. Depending on the
severity of the overall hash power reduction, new block discovery might slow
down significantly. This would also delay a recalculation of the new
difficulty accommodating the reduction in hash power.

The network could be severely throttled for weeks.

~~~
josu
How can you actually shut down mining? Maybe they'd make it harder for miners
to convert bitcoins to fiat, but that wouldn't stop the mining.

~~~
Analemma_
I doubt they actually care about the mining, but they certainly could shut it
down if they wanted to. I mean, it's China. It's not exactly difficult to
locate the miners either - look for the building using 400 MW that doesn't
have any steel or widgets coming out.

But I think the parent's point was that, if the Chinese exchanges were shut
down, that could have a big impact on price _if_ the hypothesis is true that
most bitcoin activity is evading Chinese capital controls. If the hit was big
enough it might push mining into unprofitability. This is all speculation, but
not impossible.

~~~
altoz
First, yes, there are large farms of miners, but that's only some of the
mining power. While these mining farms can be targeted and shut down, a
significant amount of mining power is actually held in places that wouldn't be
easy to locate. Those miners are going to keep mining as the owners have a
strong economic incentive to do so, even if their mining pool in China gets
shut down. They could, for example, just connect to a pool outside of China.

Also, what would happen to all the mining equipment should a mining farm get
shut down? If the shut down is permanent, you can bet the people that own
those machines would try to sell those miners as quickly as possible to people
outside the country that can run them.

The economic incentives of bitcoin are such that there will be significant
resistance to any government attempts at shutting down.

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Animats
Both exchanges are still allowing withdrawals in renminbi. If you have any
funds there, get them out now.

The statements from both exchanges are almost identical, indicating the
statements were dictated to them. The PBOC itself has a statement: [1]
(Reuters summary [2])

"Following the early January on the "fire network" and "currency" two major
Bitcoin currency trading platform to carry out inspection, the afternoon of
February 8, the People's Bank business management department inspection team
also engaged in other bitcoin currency transactions (List of companies: CHBTC,
BtcTrade, HaoBTC, Yunbi, Yuanbao, BTC100, Jubi, BitBays and Dahonghuo.)

"The main person in charge of Bitcoin trading platform to inform the current
Bitcoin trading platform problems, suggesting the trading platform may exist
legal risks, policy risks and technical risks, understand the operation of the
nine trading platform, and put forward specific requirements Shall not violate
the state's laws and regulations on anti-money laundering, foreign exchange
administration, payment and settlement, etc., and shall not violate the laws
of the State on taxation and administration of industry and commerce
advertisements, and so on, and may not engage in money laundering activities.
If there is a Bitcoin trading platform in violation of the above requirements,
(and) the circumstances are serious, the inspection team will be brought to
the relevant departments to be closed down according to law."

The PBOC had previously, back in January, made some exchanges stop allowing
users to trade on margin. That's what the first line is about.

[1]
[http://beijing.pbc.gov.cn/beijing/132005/3248926/index.html](http://beijing.pbc.gov.cn/beijing/132005/3248926/index.html)
[2] [http://www.reuters.com/article/us-china-bitcoin-
idUSKBN15O1C...](http://www.reuters.com/article/us-china-bitcoin-
idUSKBN15O1CR)

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Curbob
at the prices of bitcoin right now, about every day I wonder if it's the day
to cash out. While I see these changes are to stop money laundering, I wonder
what percentage of the bitcoin worth is from it being used for money
laundering.

~~~
bdcravens
And more importantly, how much have you benefited from it? I don't mean in the
moral sense, but as in how much of Bitcoin's gains have come from a house of
cards with no long-term foundation, and how much from "organic" growth as a
currency?

~~~
logicallee
I hate bitcoin because by design it burns resources, polluting the
environment, and by design it enables extralegal monetary remittance subject
to the laws of no one, no matter how "legitimate" those laws and no matter how
well they reflect the will of the governed. The idea of government is
fundamental: otherwise, might makes right. Bitcoin makes it impossible to
ensure anything like that is happening.

I state all this as my "credentials" for making the statement that
theoretically it is not a house of cards. Transactions could take 72 hours to
clear. The blockchain could be 1.7 terabytes in size. And transactions could
cost hundreds of dollars. None of this would stop bitgold from having a market
capitalization in the hundreds of billions. (What could stop it is some
technical bugs or mismanagement.)

It is emphatically not a house of cards. (But I don't like it.)

In what way is it a house of cards? It is a legitimately scarce resource being
legitimately used exactly as designed.

~~~
emiliobumachar
About the environment, I have not crunched the numbers, but I suppose Bitcoin
is actually greener than gold. Literal mining is messy.

~~~
srssays
Presumably bitcoin mining is generally done in places that have hydro-powered
electricity (cheaper)?

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bitJericho
The following is my exchange if anybodys looking for a new one.
[http://bitcoinsexchange.itmustbetrue.com](http://bitcoinsexchange.itmustbetrue.com)

~~~
LeifCarrotson
Has the same problem as Expert's Exchange had back in the day.

Idea: A registrar service that helps to identify and avoid awkward lexical
ambiguities like this one. Or one which generates them!

~~~
gukov
Doesn't anyone look at the domains they click...

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BrailleHunting
Keeping anything in China is inherently risky. Rights (ie property, monetary,
human, civil, etc.) aren't consistently certain from one day to the next.

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arisAlexis
the chinese are not fools. they have a good control over the btc network hash
why would they give up this power?

