Chinese Bitcoin Exchanges Find Workaround To Allow RMB Deposits, Exchange Rate Rallies

Journalist:
December 27, 2013

Read the original Chinese article on btc38 and btckan, a prominent Chinese Bitcoin exchange and website, respectively.

BTC China’s CEO Bobby Lee has introduced a new method for Bitcoiners in China to “recharge” their RMB balances on Chinese Bitcoin Exchanges: BTC China vouchers.  Within a week, Chinese Bitcoin Exchanges led by BTC China, have found a solution for getting RMB deposits into Chinese Bitcoin Exchanges in compliance with ever-changing interpretations of Chinese law.  Alternatively, Huobi’s CEO has been using his personal bank account to provide RMB liquidity for all of his customers.  As a result, in contrast to the general trend of lowered Chinese volume in the last few days, Huobi had volume and price approaching that of Russian exchange BTC-e.

Once your cash is put into BTC China vouchers, it can be traded with other Bitcoin exchanges and also other users.  A BTC China voucher comes in two halves.  The first half you can offer to a potential buyer and they will be able to check the balance on BTC China’s voucher recharge page.  The second half, when given to the potential buyer, allows said buyer to redeem the voucher on BTC China.

This method of using vouchers has been adopted by OKCoin and BTC China thus far.  BTC China CEO Bobby Lee made a point to say that BTC-e, Mt. Gox, 786, and most other successful Bitcoin exchanges all use fiat vouchers in some way, shape, or form.  Obviously, such a workaround has been incredibly prevalent around the world in different regulatory climates and there’s no reason to think that this is only a temporary solution.  China’s government has started to make it clear what type of hoops Bitcoin Exchanges and Bitcoiners in China will have to jump through on a regular basis.  From the rising volume and exchange rate, we can safely assume that Chinese Bitcoiners, and Bitcoiners around the world, are more than willing to deal with vouchers and hoops to get their hands on some Bitcoin.

In the past 24 hours, almost half of the total Bitcoin exchange volume has been on BTC China.  In comparison with the lowered volumes after all major Chinese Exchanges reinstated 0.3% fees on December 18th, the recent spike in Bitcoin volume shows the re-entrance of some Chinese players to the market.  A closed-door meeting between the Chinese Central Bank and major third-party payment processors in China on December 17th ended direct bank and third party payment processor deposits and withdrawals to Chinese Bitcoin Exchanges. The recovery is not over yet, on news of Chinese exchanges resuming normal operations, the exchange rate has risen over 10% since Christmas.

Also as a response to the People’s Bank of China’s December 5th statement, on December 20th, BTC China revealed their new “币加锁” or “currency lock” system.  This “currency lock” is essentially cold storage for your coins provided and guaranteed by BTC China.  BTC China states that cold stored Bitcoins cannot be stolen by online hackers, a fate that often befalls online Bitcoin services that store their Bitcoins solely in a hot wallet.  Most Bitcoiners hope that the Chinese government will recognize BTC China’s hard work at regulatory compliance and that governments won’t damage Bitcoin’s future any further; whether or not hopes and reality will match remains to be seen.

Last modified (UTC): December 27, 2013 06:25

Caleb Chen @bitxbitxbitcoin

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.