A recent article by ZeroHedge regarding potential bitcoin curbing measures by Chinese authorities has raised a number of questions in bitcoin's community, but Bloomberg confirmed that an article by Steven Yang, Bloomberg’s Beijing correspondent, used by ZeroHedge as a source, is authentic.
A spokesperson for Bloomberg told CCN over the phone that the article remains live in their terminals which are accessible to only Bloomberg subscribers and not available on the clearnet. Other industry publications like Singapore's The Business Times have since reported on the story.
Asked whether there is any reason to doubt the article’s authenticity, the spokesperson stated that the article was a legitimate report, before providing the author’s details. Yang has not yet responded to our requests for comments.
The Bloomberg report states that “China’s regulators are studying measures to limit transactions that use bitcoin to take funds out of the country, according to people familiar with the matter.”
The report continues to state:
Officials are considering policies including restricting domestic bitcoin exchanges from moving the cryptocurrency to platforms outside the nation and imposing quotas on the amount of bitcoins that can be sent abroad, the people said.
No official is named. Moreover, there has been no confirmation from China’s central bank nor can we find any original Chinese source corroborating the story. However, Bloomberg’s confirmation of the legitimacy of the article may indicate that China might intervene as Yuan has recently fallen in value considerably which assists China’s exporting economy, but, at the same time, threatens its financial stability.
The Chinese government, therefore, has taken a number of measures, with China UnionPay Co. restricting the use of its credit and debit cards to buy insurance products in Hong Kong, a popular choice by Chinese individuals trying to hedge against the falling yuan by buying dollars.
Another popular hedge is Bitcoin which has seen its price increasing by more than 20% over the past few weeks. However, it fell yesterday by more than $40 on Bloomberg’s news.
Bitcoin used to be incredibly popular in China with Baidu, China’s google, accepting it for payments. It’s ever increasing popularity contributed, at least in part, to bitcoin’s November 2013 bubble when the currency’s value increased from under $100 to more than $1,000. However, in December 2013, China's central bank, the Ministry of Industry, the CBRC, CSRC and CIRC, otherwise described as the five ministries, issued a joint statement warning against bitcoin’s risks. Since then, few, if any, accept bitcoin for payment in China, but it has remained very popular for mining and trading with Chinese exchanges the biggest in the world.
It is not clear if China will now take even more restrictive measures towards exchanges, but if Bloomberg’s report is officially confirmed, it seems to suggest that the Chinese government may prevent Chinese bitcoin exchanges from sending bitcoin outside of China which in practice may limit Yuan to USD conversion trough cryptocurrencies. Whether this can be enforced, however, remains to be seen.
Image from Shutterstock. Chart from BitcoinWisdom.