OKCoin’s decision to reinstate user trading fees this week has caused a stir among bitcoin traders.
The bitcoin and litecoin exchange became the second major Chinese exchange to reinstate user trading fees this week, announcing on Monday (16th December) that a 0.3% fee would be charged on each bitcoin transaction made and 0.2% for litecoin transactions.
Many bitcoin traders took to social media platforms such as Sina Weibo to complain about the perceived injustice of it all.
In response, Star Xu (Xu Mingxing), founding CEO of OKCoin, issued a statement on 17th December. In an emotionally-charged article that was published on the exchange’s forum, Xu alerted users that the speculative craze could cause serious harm to bitcoin’s prospects.
Xu added that the purpose of the fee policy is to alleviate speculative activities and is in compliance with the Chinese Central Bank’s spirit of strengthening regulation on bitcoin exchanges.
The CEO also noted that some traders have been engaged in program-controlled speed trading in efforts to manipulate the bitcoin exchange rate, which has, in effect, exacerbated the currency’s volatility.
When highlighting the danger of over-speculation, Xu cited an example of an accountant who told him that she spent her company’s entire month’s salary to buy bitcoins to make a quick profit.
The article concludes with a rather idealistic-sounding plea:
I want to reiterate what I have said in many other occasions: Bitcoin is a social experiment and every experiment carries the risk of failure.
If you are joining because someone told you that its value will double, please go away; If you have no idea what bitcoin is, please go away; if you are a big-time international investor, please have some restraint, don’t put bitcoin in a situation that will have no return.
We like its elegant mathematical design, and believe in the great ideal behind it. We want to protect the experiment as we can.
When BTC China reinstated its fees, it published this statement:
Dear BTC China valued customer: To stabilize the recent turbulent Bitcoin market and minimize potential market manipulation, BTC China will end the 0% trading fee promotion, effective immediately, and revert to the 0.3% trading fee. We deeply apologize for the sudden change. BTC China, December 16, 2013
The companies took this action after news emerged that the People’s Bank of China had met with the country’s third-party payment companies and told them they can no longer do business with bitcoin exchanges.
This news seemed to cause a wave of panic selling, with the price of bitcoin falling from around $880 early on Monday morning (GMT) to $422 at around 11:00 today.
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