Big China bitcoin exchange says no government pressure on outflows

Mon Jan 9, 2017 11:30am EST
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By John Ruwitch

SHANGHAI (Reuters) - The head of a major bitcoin exchange in China says few people there use the cryptocurrency to get around rules on how much money they can take out of the country, and despite a publicized meeting with the central bank last week the exchange, BTCC, hasn't been told explicitly to check capital outflows.

Bitcoin's price took a steep dive on Friday after China's central bank cautioned investors to take a rational and careful approach to investing in the digital currency. The price had surged to record highs.

The central bank's comments come as Beijing escalates a campaign to check capital outflows and slow the depreciation of the yuan currency CNY=CFXS, which lost nearly 7 percent of its value against the U.S. dollar last year.

With bitcoin's soaring price and the relative anonymity it affords, some believe the digital currency was becoming an attractive option for tech-savvy Chinese to hedge against the yuan and circumvent rules that limit individuals to $50,000 of foreign exchange each year.

The Shanghai office of the People's Bank of China (PBOC) said on Friday it had met with BTCC to understand the platform's operations, highlight the risks, remind the exchange to abide by the law, and "urge the platform to carry out self-examination and corresponding clean-up and rectification" according to law.

Asked if BTCC had received direct pressure on outflows, CEO Bobby Lee, who founded BTCC in 2011, said: "No. Not as of yet... Nothing verbal or written to us."

In Beijing, the PBOC told two of China's other big bitcoin exchanges, Huobi and OKCoin, not to mention the depreciating yuan when advertising their platforms, the influential news outlet Caixin said, citing people familiar with the meeting.

Star Xu, CEO and founder of OKCoin, confirmed there had been a meeting of the PBOC and leading bitcoin exchanges on Friday to discuss the operation of trading platforms.   Continued...

A Bitcoin (virtual currency) paper wallet with QR codes and a coin are seen in an illustration picture taken at La Maison du Bitcoin in Paris, France, May 27, 2015.  REUTERS/Benoit Tessier/File Photo