Editor’s Note: BTC China has been dropped by Tenpay, the 2nd largest third party payment processor in China after Alipay, and is currently using Yeepay (an obscure smaller third party payment processor) for deposits and withdrawals. BTC China is also located in a special zone in Shanghai and it is my opinion that BTC China will continue legal operations in the best interest of their users; however, the waters in the meantime will be tumultuous. The timeline is this: By Chinese New Years, Chinese Bitcoin Exchanges will have to have found new ways for users to deposit and withdraw.. virtual commodity payment processors anyone?
The Bitcoin chart remains somewhat precarious following the latest round of news and rumours out of China. All markets hate uncertainty, so we hope this article goes some way towards providing clarity.
Our Chief Editor, Caleb Chen, has obliged by providing the following translation:
The Central bank prescribes that third party payment institutions are not allowed to provide Bitcoin Trading websites with money holding, trading, or other services.
According to First Financial Dailys’ reporter’s exclusive scoop, after “The Notice” on December 5th , yesterday the PBOC launched another “attack.” According to interviews with more than 10 third party payment institution officials, they were clearly told to not provide payment and settlement services to Bitcoin and Litecoin Exchanges.
In less than two weeks, the central bank has fired a quick “one-two” to prepare and protect China against Bitcoin risk. More and more Bitcoin insiders think that the central bank’s fervor is drastic.
Third Party Payment Processor’s Three Guidelines
A representative of a large third party payment company told reporters that yesterday morning more than 10 third party payment companies were convened by the PBOC for a closed-door meeting. The afore-mentioned source revealed to reporters in an interview that the meeting was chaired by the Central Bank’s payments and settlements’ deputy secretary Zhang, each invited third party payment company sent 1 or 2 participants to attend.
At the beginning of the meeting, Deputy Secretary Zhang made it clear that the meeting was not convened to discuss with the companies what can and can’t be done with Bitcoin, rather to convey the attitude of the top level Central Bank: firstly, third party payment companies can not provide payment and settlement services for Bitcoin or Litecoin online trading websites. Secondly, in regards to business that has already occurred, institutional business cooperation should end and withdrawal of funds should be completed by Chinese New Year at the latest, and no new payment services shall be conducted. Thirdly, The PBOC’s previous “notice” from December 5th, shall be adhered to strictly. These are the three points that our third party payment processor source told us.
According to meeting notes taken by third party payment company representatives this reporter was able to access, the meeting revealed that domestic regulations will not permit third party payment companies to engage in Bitcoin related business. The PBOC will, at a later date, research and release more regulation pertaining domestic Bitcoin business and their relations with international payment processor.
After the meeting, each payment company was made aware that the PBOC intended to strictly enforce the above three requirements. However, it is worth noting that BTC China, one of the world’s top BTC trading sites, as well as OKCOIN, a BTC and LTC trading website, have switched from their original third party payment processors to new ones. Meanwhile, users of both sites are complaining that exchanges can only use their on hand money for withdrawals and users are not able to top-off.
“Alipay has never cooperated with any Bitcoin trading site,” Alipay officials told reporters in an interview. “If we allow users to deposit funds in Alipay, we must be alert as to whether or not these individual accounts are actually personal accounts, investors should also be made aware of all risks involved.
Some Bitcoin Insiders believe that what can be learned from yesterday’s PBOC meeting with third party payment processors is that the PBOC’s risk prevention efforts may lead to a larger Bitcoin. One in particular is puzzled because divorcing Bitcoin trading websites from established third party payment processors increases the difficulty of monitoring transactions and preventing money laundering.
Is Bitcoin’s future in China looking bleak?
“After these notices, we are just worried about this third party payment processor issue and whether or not it will cause us to go out of business, we didn’t plan for this circumstance,” said one manager of an online Bitcoin trading website to a reporter after hearing the news.
Quite a few industry insiders have said that the future of Bitcoin in China is now a worrying situation. They will have to choose varying levels of “escape”, or transfer to offsore Bitcoin trading websites.
Before now, the PBOC’s “notice” explicitly requested, at this stage, that financial and payment institutions in China shouldn’t conduct business using Bitcoins, shouldn’t use Bitcoin for a product or service’s pricing, and shouldn’t underwrite the selling or trading of Bitcoins. After the original “notice” was released, the Bitcoin market had a brief downward movement but very quickly recovered what was “lost”.
Yesterday’s meeting’s impact on Bitcoin prices remains to be seen, but as of reporting this article, BTC China’s Bitcoin price has fallen from yesterday’s high of 5335 RMB to 4600 RMB, a 15% decrease.