Uncertainty Dominates as China Clamps Down on Cryptocurrency

China is clamping down on cryptocurrency, that much is clear. But while the developing story dominates headlines, a notable trend is the lack of official information. Chinese officials seem to systematically decline requests for comments, local sources are willing to provide information on condition of anonymity only, while leaked documents remain unverified.

Despite this lack of clarity, here’s what’s known so far.

Effects on Trading

The most important thing we know for sure is that Chinese bitcoin exchanges will be closing down, or at least exiting China.

BTCC — the oldest bitcoin exchange in the world — was the first exchange to announce they’d be closing shop within the Asian country, by the end of this month. The exchange cited guidelines published by the Chinese central bank (the People’s Bank of China; PBOC), which initially appeared to only affect ICOs, as its reason for closing down.

Other exchanges quickly followed BTCC’s lead. ViaBTC and Yunbi both announced that they’d be ceasing operations by the end of this month. Huobi and OKCoin, the two other major Chinese exchanges, announced they would be shutting down too, though not until the end of October. And BitKan, a big over-the-counter (OTC) trading service rather than an order-book exchange, announced it would be shutting down as well.

While the cited guidelines initially did not seem to concern bitcoin, it is likely that Chinese officials have made it clear through separate channels that they do apply to the cryptocurrency. Bloomberg (among others) reports that exchange operators decided to close down after in-person meetings with PBOC officials, and the Wall Street Journal reports — based on anonymous sources — that the PBOC has prepared a set of “draft instructions” that would ban cryptocurrency trading altogether. These draft instructions have also been leaked (translation) but have so far not been verified for authenticity.

The content of the leaked documents is also consistent with warnings issued by a Chinese quasi-regulatory body — the National Internet Finance Association of China (NIFA) — regarding cryptocurrency trading, published shortly before exchanges announced that they would be shutting down.

According to the NIFA, Bitcoin exchanges lack “legal basis” to operate in the country. Additionally, NIFA official Li Lihui told a technology conference in Shanghai on Friday that a goal of China’s monetary regulation is to ensure that “the source and destination of every piece of money can be tracked.”

The Status of Bitcoin

As far as official statements go, Bitcoin itself is not banned in China. Owning, using, and — most importantly — mining bitcoin should technically not be affected by the published guidelines.

However, more unverified reports (translation) consistent with reporting from the Wall Street Journal, claim that Bitcoin itself will be blocked by the so-called “great firewall of China.” Specifically, seed addresses, which help to bootstrap any new Bitcoin node, and Bitcoin blocks, necessary to construct the blockchain, would be filtered from internet traffic into China, using deep packet inspection.

Additionally, major foreign Bitcoin exchanges like Coinbase, Bitfinex and LocalBitcoins would be added to the list of banned domains, which already includes sites like Google and Facebook. And even private trading of cryptocurrency arranged through chat-apps like Telegram and WeChat, for example, could fall under scrutiny, according to the Wall Street Journal.

This much stricter stance on Bitcoin, beyond just exchanges but also concerning Bitcoin itself, seem consistent with comments from PBOC Counselor Sheng Songcheng, as reported by local news sources like Shanghai Securities News. Songcheng was quoted to have said that Bitcoin poses a challenge to China, mentioning money laundering and its potential to curb the nation’s economic policy.

Furthermore, very recent reports indicate that cryptocurrency exchange operators are currently not allowed to leave Beijing. Local news outlet BJ News writes:

“[According to] a number of informed sources, the current special currency trading platform executives and so on are not allowed to leave Beijing, [in order] to cooperate with the investigation. In accordance with regulatory requirements, the trading platform shareholders, the actual controller, executives, financial executives [must] fully cooperate with the relevant work in the clean-up period in Beijing.” (Rough translation.)

What This Means…

Trading bitcoin via dedicated exchange platforms in China is off the table for now — that is clear.

But it’s not yet clear how successful a full Chinese Bitcoin blockade could be. It would technically only require a single Bitcoin block of a maximum of four megabytes to make it into China about once every 10 minutes, potentially even through satellite, for the entire country to be able to access the blockchain. As such, banning individual Chinese citizens from owning and using bitcoin might prove difficult, even if exchange platforms close down.

Perhaps an even more important question is what will happen to Bitcoin mining: It’s likely that most of Bitcoin’s hash power is currently situated in the Asian country. While miners should able to connect to the rest of the world, according to ViaBTC CEO Haipo Yang, it’s unclear if this connection will be allowed for much longer. If Chinese authorities indeed intend to ban Bitcoin from the country entirely, Bitcoin mining operations — both mining pools and hash power data centers — will be easy targets to shut down.

On the other hand, this is not the first time that fears of China “banning Bitcoin” have been raised. In the past, such concerns have simply been a prelude to stricter regulations by local authorities.

It has been suggested by Bitmain CEO Jihan Wu, perhaps a bit optimistically, that exchanges will simply require a new license to continue operation. Similarly, it’s been speculated that the PBOC may introduce a national digital currency as a sort of gateway to cryptocurrency: This would allow the central bank to better track the flow of funds in and out of bitcoin in order to counter money laundering and capital flight.

Then again, it could make more sense to introduce such a national digital currency as a substitute for Bitcoin, once Bitcoin is effectively banned, as suggested by ZeroHedge.

For now, uncertainty prevails.

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China is clamping down on cryptocurrency, that much is clear. But while the developing story dominates headlines, a notable trend is the lack of official information. Chinese officials seem to systematically decline requests for comments, local sour…

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At its core, the site is<br />censorship resistant — a characteristic generally viewed as a key element in<br />the democratization of journalism. In<br />gathering and curating online content, site curators are incentivized and<br />rewarded for their efforts. The Snip online community connects writers to<br />readers directly, mitigating the risk of censorship and bias inherent in the<br />legacy news industry.This<br />entire process is seamless, with end users able to take in their own collection<br />of snippets which are personalized through machine learning algorithms. The<br />ultimate goal is to ensure that users can have a quality site experience<br />without needing to understand the intricacies of the distributed technology and<br />cryptocurrency systems undergirding the site.Writers<br />can generate income from their efforts. 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Reichman, for one, has strong opinions about ICOs, noting that<br />project developers often launch ventures without any credible evidence of a<br />functional product or service model. Snip, he added, transcends this as a<br />result of already having tens of thousands of active users, as well as over a<br />thousand paying subscribers. This proven functionality, he said, should give “our ICO<br />participant confidence that the Snip team will create a product people will<br />actively engage with and enjoy.” A New Era of Blockchain-Driven ContentBlockchain-based news delivery offers immense possibilities in<br />terms of how news could be digested, whether on social media or mainstream<br />media feeds. This nascent technological movement has the potential to decentralize<br />control, remove third-party intermediaries from public news access, prevent<br />censorship and promote bias-free content. According to Reichman, Snip is uniquely positioned to capitalize<br />on three major trends that are currently reshaping the media landscape:Tokenization and Cryptocurrencies: Tokens allow companies to turn their users and contributors into<br />real stakeholders of the ecosystem, making them ambassadors of the product.<br />This is especially important in news, where distribution is a huge challenge.Machine Learning: Snip uses machine learning to find the best content online, then<br />offers it to writers and subsequently personalizes the content to users with<br />additional machine learning technology.The Rise of the Millennial Generation: As opposed to previous generations, millennials never got used<br />to reading print newspapers and expect an online-first news outlet — ideally, one<br />which is smart, interactive and to the point.When asked about his greatest hope and vision for Snip over the<br />next 12 to 18 months, Reichman laid out his thinking. “Our vision for Snip is to become the go-to place for news, a<br />household name which everyone can rely on for information on what’s going on,<br />and also to discover new and interesting topics of conversation,” he said. “In<br />18 months we aim to reach more than a million daily users.”To learn more about Snip and its token sale this<br />month, read the white paper, follow<br />Snip on Twitter or contact the team via Telegram.The post Snip and the Future of Distributed, Online Content appeared first on Bitcoin Magazine.

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