Following the much-publicized meetings between China’s central bank and the country’s major bitcoin exchanges, the head of BTCC has claimed that it’ll be a few years yet before the bitcoin is regulated in the country.
The opinion comes alongside the notable revelation that the People’s Bank of China – the central bank – has not explicitly demanded that BTCC check capital outflows from the country.
Bobby Lee, the chief executive of BTCC made the revelations in an interview with Reuters . In response to a question if BTCC had received any direct pressure by the PBOC to curb the exit of Chinese capital through bitcoin, he stated:
No. Not as of yet…Nothing verbal or written to us.
Last Friday, the PBOC revealed meetings with BTCC, Huobi and OKCoin, China’s big bitcoin exchanges and warned the platforms to perform “self-examination” following “abnormal price fluctuations” of bitcoin. Prior to the warning, bitcoin price had reached record highs followed by a steep drop, showcasing the volatility that some naysayers have often pointed to.
It is perhaps curious if the PBOC, wielding its authority as the country’s financial regulator, is, in fact, turning the screws on major bitcoin exchanges to control the outflow of Chinese yuan.
Valued at its all-time high of $1163, the total value of all bitcoins on the blockchain (accounting for the near 5 million coins yet to be mined) is about $24.5 billion. That figure is but a fraction of China’s foreign exchange reserves.
Due to the heightened demand, bitcoin is being sold at a premium in its price in yuan. Lee doesn’t see it viable for Chinese adopters to buy bitcoin with yuan toa then sell it abroad in exchange for foreign currencies. “[T]o be honest, not many” investors used bitcoin to evade capital caps, currently set at $50,000. Further, bitcoin spot prices and rates for a transaction are affected for buy or sell orders at BTCC, between the 100,000 yuan and the 1 million yuan range.
Speaking to Reuters, Lee contends:
For that range, you’re not going to be able to do it at a good rate. You’re going to lose 10 percent of your money. Maybe the individual household might by 20,00 more dollars worth of bitcoin than their $50,000 forex quota, but that’s a drop in the bucket.
According to Lee, it could be a while yet before China considers regulating bitcoin, a “virtual good” that does not have legal tender, as designated by the PBOC. Pointing to no particular discussion about regulatory oversight or rules of bitcoin during the recently publicized meetings, Lee sees China regulating bitcoin in about two to three years.
For its part, BTCC, which claims to be the longest running exchange in the world, adds that it “regularly meets” with the PBOC to ensure that it works “in accordance with the laws and regulations of China.”
Images from Shutterstock.