Bitcoin Markets Rise On News Of Chinese Bitcoin Exchanges’ Response Plan To Bank Accounts Closing

April 11, 2014 08:00 UTC

Today at 10:35 local time, OKCoin posted an announcement to their website.  The announcement was titled, OKCoin将暂停招商银行卡充值业务及应对预案公告: OKCoin Announces Suspension Of China Merchant Bank Card Recharge And Response Plan. OKCoin revealed that they received oral notification from their bank, the China Merchants Bank, that their deposit services were to be terminated.  The Xi’erqi branch of the China Merchants Bank, which had a strong working relationship with OKCoin, revealed that the notification was passed down from upper management within the bank, much like what happened with the Agricultural Bank of China and the Industrial and Commercial Bank of China.  Interestingly enough, this is also the latest move out of the National Australia Bank.

In response to this news, just another glancing blow in an onslaught of bad news out of China, the Bitcoin markets took an unexpected upturn.  Bitcoiners have observed that this upturn in the market was largely led by Huobi, though all Bitcoin exchanges followed suit.  Obviously, news of Chinese Bitcoin Exchanges closing Bank card recharges is already priced in seeing as how several similar announcements have been made in the last few weeks.  The “new news” is OKCoin’s Response Plan.

BTC-e showing a rise from a 5 month Bitcoin Exchange Rate low.

Yesterday morning in China, BtcTrade and Huobi were informed by their respective banks of a similar end to their business accounts.  The respective city and county branches of the Agricultural Bank of China and the Industrial and Commercial Bank of China both informed their Bitcoin business partners that they had to suspend bank card recharges in the next week.  Weeks ago, on 4/3/14, several Chinese Bitcoin Exchanges, including OKCoin, announced the end of yuan deposits via 3rd party payment processors.  Before that, Bter was the first to receive a notice directly referencing the PBOC notice that nobody from the Bitcoin community has yet, or may ever, see.  On 3/27/14, Chinese reporters from Caixin claimed to have seen the PBOC document and published a synopsis of its contents.  The title of the supposed notice is this: 关于进一步加强比特币风险防范工作的通知, or the Notice on Further Strengthening Bitcoin Risk Prevention Measures.  In the notice, the PBOC called for strict adherence to its 12/05/13 statement, informing these entities that they needed to halt all business with Bitcoin related companies and sites by 4/15/14.

Response Plan

OKCoin presented a 2 point response plan to the closing of their bank account by China Merchants Bank.

1. A New Yuan Recharge method using codes

2. An overseas website

I believe that OKCoin is using a new yuan deposit method similar to the one being used by BTC China at the moment, which BTC China created shortly after the original PBOC notice back in December 2013.  Furthermore, they are planning to open an overseas website.  OKCoin was intentionally vague about whether this overseas website would be inside China facing out, or outside China facing in.  BtcTrade, in the same vein, revealed their response plan yesterday as well.  BtcTrade has already registered their company in Hong Kong, Japan, and the USA and are also planning to open an “overseas website.”   They will also start USD trading, and you really shouldn’t be surprised if more Chinese Bitcoin Exchanges start announcing this move.  Just like you shouldn’t have been surprised when BTC-e announced Chinese Yuan trading.

No matter what the banks are doing, anywhere in the world, Bitcoin services (exchanges being just one example) are more than ready to adapt.  Have some faith in the protocol, don’t panic!

Last modified: April 11, 2014 08:06 UTC

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