Caixin Article Claims PBOC Is Meeting With Banks And Payment Processors To Completely Cut Off Funding To Bitcoin Trading

April 25, 2014 08:33 UTC
Caixin is a respected Chinese financial news source

Bitcoin prices have dropped nearly 10% across all Bitcoin exchanges, with the bulk of the action understandably located on Chinese Bitcoin Exchanges.  A few hours ago, Caixin published a Chinese article claiming that the PBOC has met with commercial banks and third party payment processors, in particular those that do, or have done, business with Chinese Bitcoin Exchanges to remind them of the PBOC’s stance.  This Caixin article is written by a different author than the last Caixin article that was commented on in Western media (which broke the news of the March PBOC Notice).  The PBOC is cracking down on the adaptive funding methods that Chinese Bitcoin Exchanges have come up with, and is even moving to stop cash withdrawals.  However, they still are not enforcing anything for individuals nor merchants.

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[dropcap size=small]U[/dropcap]pon running the article through Google Translate, some Redditors discovered a line that was incorrectly translated as saying the PBOC desired to “ban all transactions.”  Needless to say, again, this is simply not the case.  The PBOC is, however, taking a much more hard-line approach to the pressing issue of capital flight from RMB to BTC to Satoshi knows what: They wish to “completely cut off the funding line into Bitcoin trading.”  The PBOC is talking with both compliant and non-compliant banks, Chinese Bitcoin Exchanges, and third party payment processors in meetings overseen by the Payment and Clearing Organization of China, hopefully there will be meaningful two-way dialogue that may soften the PBOC’s stance.

Many Chinese Bitcoin onlookers have been perplexed by the silence of the PBOC following all the hubbub earlier in April concerning the now-long-gone 4/15/14 deadline for commercial banks and 3rd party payment processors in China to stop doing business with Chinese Bitcoin trading platforms.  Chinese Bitcoin Exchanges have been adapting over the last few weeks as many had their bank accounts closed.  The government forced anti-Bitcoin moves of most of China’s major banks have forced Chinese Bitcoin Exchanges to turn to unconventional methods for funding, such as ATMs.  Some Chinese Bitcoin Exchanges plan on taking their funding methods, and even their websites, overseas to more favorable regulatory environments.

Original Chinese Article.

English Translation of first page:

【Caixin】(Reporter: Li SuiSui)

In the morning of April 24, PBOC met with some commercial banks and 3rd party payment processors to discuss the next step in bitcoin risk prevention, hoping to completely cut off the funding line into Bitcoin trading.

On 4/22, the Central Bank, through the Payment and Clearing Organization of China, initiated this meeting. Interviewees include all commercial banks and 3rd party payment processors related to Bitcoin, with the total number of participants no less than 20. These include various large commercial banks, AliPay, Tenpay and other large scale payment processors which includes Huobi.com’s recharge code provider, EPRO payments.

The meeting is chaired by the Central Bank Department of Treaty and Law Director Mu Huaipeng, other participants include Secretary Lai Yue as well as other PBOC officials, all of who have higher standards than ever before.

Central bankers have stated that this meeting is focused on Bitcoin’s significant price rebound after 4/15, which led to an awkward situation as accounts were not cleared to expectations.

It was in March that the PBOC issued the 《Notice on Further Strengthening Bitcoin Risk Prevention Measures》, that emphasized that commercial banks and 3rd party payments processors were not to perform services for Bitcoin trading,establishing 4/15/14 as a deadline. However,come 4/15,many Bitcoin trading platforms were still functioning; Bitcoin’s exchange rate also soared from 2,500 Yuan to 3,000 Yuan.

The “Notice on Further Strengthening Bitcoin Risk Prevention Measures” still hasn’t been seen by Bitcoiners, but there is no doubt that it exists.  It will be interesting to see the end result of these PBOC meetings.  Will we have a slew of Chinese Bitcoin Exchanges announce the simultaneous end to one funding method and the rise of another?  When will the Chinese government, and all governments for that matter, realize that they can’t keep playing whack-a-mole to stymie Fiat leaking into Bitcoin?  As always, stay tuned to CCN for the latest in Bitcoin news out of China.  We will include a link to the full English translation as soon as it is released from English.Caixin.com.

Last modified: April 28, 2014 01:11 UTC

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Caleb is a graduate of the University of Virginia where he studied Economics, East Asian Studies, and Mathematics. He is currently pursuing his MSc in Digital Currency at the University of Nicosia.