The PBOC's regulatory requirements has pushed one bitcoin company to shut down its exchange operations.
The still-ongoing fallout of events spurred on by the People Bank of China’s (PBOC) involvement in the country’s bitcoin trading market has led to HaoBTC – a bitcoin company known prominently as a mining pool – to shut down its lesser-known bitcoin exchange operation, launched in April 2016.
HaoBTC was among the 9 bitcoin exchanges held to a closed-doors meeting by the PBoC on Thursday.
A miner operating with 110 Petahash to control a little over 4% of bitcoin’s network, HaoBTC has announced the removal of its exchange service to its users. The mining pool, which also launched a Hashrate Exchange in December will also stop deposits of RMB into users’ accounts. The bitcoin company’s wallet service, mining pool and hashrate exchange will remain unaffected.
A loosely translated statement explains:
Given the fact that the prospect of a regulatory policy for a bitcoin exchange isn’t clear yet and to ensure that the majority of users use our Wallet function like always, we have, after deliberation, reluctantly decided to remote the Exchange from our Wallet and have ceased RMB deposits.
Additional details reveal HaoBTC’s exchange will cease to exist at 14:00 local time on February 15, with any open orders at the time canceled automatically. RMB deposits will close on February 17, at the same time.
The decision to close the exchange is perhaps the first casualty of a bitcoin exchange the close scrutiny by the PBOC since the turn of the year. While notable, it has to be reiterated that the lesser-known bitcoin exchange is among the smaller platforms in China’s bitcoin trading market.
With meager trading volumes, the exchange figured as an accompanying platform for users of HaoBTC’s wallet and cloud mining offerings. The company claimed a trading volume of 3,000 BTC during the first week of its launch in April 2016.
“We don’t provide margins and futures (trading) now, but we will provide margins in the future. Unlike other Chinese exchanges, like OkCoin and Huobi, our exchange uses the maker/taker mode, that means we charge fees on exchanges” stated HaoBTC vice president XIong Yue speaking to CCN in December when the exchange was functional.
Signs point to a quick decision taken by the HaoBTC to shut down its exchange feature. After meeting with the PBoC last week, the exchange claimed it would update its AML system in line with the regulatory requirements put forth by the central bank.
Measures included a steep 5% service charge on RMB deposits that was scheduled to last a month. Further, traders or adopters who deposit RMB will be required to wait for 48 hours before any bitcoin trading (buying and selling) thereafter.
Evidently, the costs toward compliance and AML infrastructure mandated by the PBoC simply did not add up toward effective profitability in a low-volume exchange.
Image from Shutterstock.
Last modified: January 26, 2020 12:04 AM UTC