BTC China Dismisses PBOC Fears in Open Letter

Nermin Hajdarbegovic
Apr 4, 2014 at 12:08 UTC
Updated Apr 5, 2014 at 01:18 UTC

Shanghai-based exchange BTC China has published a statement reassuring Chinese investors that its operations will resume as normal despite looming regulatory uncertainty.

The People’s Bank of China (PBOC) is widely expected to issue a public notice later this month, which would effectively put an end to bitcoin-related money transfers in China, including yuan deposits. The rumoured notice is expected to go official on 15th April.

However, since nothing is official yet, there is plenty of misinformation floating around. In turn, the spread of PBOC-related fear, uncertainty and doubt has been blamed for the latest price slump.

Until the rumoured PBOC statement is issued, it’s unclear how it will impact exchanges and bitcoin-related businesses in China.

BTC China remains confident

However, in the face of this BTC China appears undeterred. The exchange points out that the so-called 15th April rumour and the uncertainty it spawned has already caused plenty of issues. In an open letter addressed to the Chinese bitcoin community, the exchange dismissed claims that it had received any official guidance from the PBOC:

“We’ve been tracking this issue. Whether it is local banks, Beijing’s central bank level, media channels and industry peers, we are paying close attention and keeping in contact. If we have any updates, we will immediately inform you.”

The exchange stressed that people are not afraid of the notice itself, but rather the “unknown” and uncertain future for the bitcoin space.

“We just don’t know what the outcome will be,” BTC China CEO Bobby Lee told CoinDesk. “At this stage, it’s too early for me to speculate on the options we have. We just don’t know enough right now.”

Lee added:

“What we’re hearing is that banks will disallow us from using commercial bank accounts to store customer deposits, what’s not clear to us yet is whether the business of running a bitcoin exchange will be classed as legal or not.”

Doom and gloom

BTC China then outlined the possible effects of the 15th April notice, dismissing many doomsday scenarios which have been proliferating in recent days. The exchange insists that the “core values” of bitcoin, notwithstanding the price, will remain intact regardless of what the PBOC chooses to do.

The exchange also argues that the notice will probably not have a long-term impact on the price, although it has already caused short-term price fluctuations.

BTC China also pointed out that many countries around the world are moving to supervise or regulate the bitcoin market. It cites recent regulatory moves in New York, the UK, Singapore and other financial hubs as proof that the world’s most developed economies are becoming actively involved in bitcoin.

The exchange argues that central banks and regulators are expected to tread cautiously. The impact of bitcoin on the wider economy is negligible for the time being, so rather than ban bitcoin and force it underground, regulators are more likely to recognise it as just another trend and regulate it to mitigate the risks.

This is actually a very good point and for the time being regulators appear to be doing just that. A P2P system would be next to impossible to dismantle, forcing it underground would simply make the risks much greater.

The great bitcoin bubble of China

BTC China admits that the domestic bitcoin market is indeed a bubble. The exchange explained its creation as follows:

“A general lack of domestic investment targets, coupled with the lack of understanding of bitcoin led to bitcoins becoming speculative grade. After the April 15 message, investors will re-evaluate bitcoin, an industry reshuffle may also occur.”

The exchange adds that it would welcome a reshuffle and that it sees the notice as “pre-dawn darkness.” It insists that China’s bitcoin community needs confidence to develop further. BTC China insists it is doing its part to restore confidence.

BTC China says it will upgrade its bitcoin trading platform, introduce regular third-party audits and publish their results, but more importantly it says it will expand its communication with regulators. The exchange is also planning to introduce new products which are currently in beta and it will also try to improve the overall user experience.

In essence, BTC China insists it is in it for the long haul.

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