Head of the BTCC exchange Bobby Lee, who earlier this year stated that it’ll still be another 2-3 years before China regulates bitcoin, recently went on CNBC’s Squawk Box to talk about the cryptocurrencies and their state in China.
According to Bobby Lee, cryptocurrencies need to be regulated in order to avoid getting out of control and suffering major price swings, such as those we’ve already seen this year – Ethereum, for example, crashed to a $0.10 low on Coinbase’s exchange GDAX due to a major sell order.
Recently, cryptocurrency total market cap fell below $80 billion as most major cryptocurrencies have been losing value. Ethereum’s market cap, for example, nearly reached $40 billion last month, and is now below $20 billion, according to data from CoinMarketCap.
As more and more people enter the cryptocurrency ecosystem, major price swings become likelier, according to the CEO. Bobby Lee stated that with regulations, cryptocurrencies won’t run amok. He stated:
“I think regulation is much needed for this new asset class because otherwise it’ll run amok from society.”
BTCC’s CEO then added that the challenge regulators and lawmakers are currently facing is that of crafting rules to regulate cryptocurrencies, as this is a new technology.
As recently covered by CCN, the People’s bank of China (PBoC). China’s central bank, has recently opened a research lab centered around the research and development of digital currencies. Back in May, it has also set up a FinTech committee for ‘strengthening the research, work, planning, and coordination’ of financial technologies. These may, however, also be related to China’s national digital currency development.
China’s central bank believes bitcoin exchanges can’t work without regulations and, as such, has stepped up to regulate cryptocurrency exchanges. In January, the PBoC conducted on-site checks on the three major bitcoin exchanges in the country: Huobi, BTCC, and OKCoin.
Authorities were reportedly attracted to bitcoin exchanges because it was believed they were attempting to reduce capital outflows, believed to be taking place through bitcoin. Some saw PBoC’s move as a crackdown on bitcoin but Bobby Lee has a different opinion. He stated:
“It’s not really a crackdown. The central bank previously was not very aware of the details of how bitcoin is utilized, how bitcoin is traded.”
According to Bobby Lee, the issue was that bitcoin’s price surge coincided with the capital outflows from China, and the exchanges rates of the yuan against the dollar. At the time, PBoC’s move resulted in a price drop for bitcoin, with lesser known Chinese bitcoin miner HaoBTC shutting down operations after removing its exchange service.
In order to adhere to strict Anti-Money Laundering and regulatory requirements enforced by the central bank, BTCC, OKCoin, and Huobi shut down cryptocurrency withdrawals for months, before finally resuming them.
Bobby Lee also added that banks need to embrace bitcoin and other cryptocurrencies, as these are actively being traded in China, as well as in the rest of the world. He stated:
“It’s a new thing the central banks should pay attention to and figure out what the rules and regulations should be.”
Featured image from YouTube/iFXExpo.