Bitcoin slides as China's central bank launches checks on exchanges

Wed Jan 11, 2017 8:58am EST
 
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By John Ruwitch and Jemima Kelly

SHANGHAI/LONDON (Reuters) - China's central bank launched spot checks on leading bitcoin exchanges in Beijing and Shanghai, ratcheting up pressure on potential capital outflows and knocking the price of the cryptocurrency down more than 12 percent against the dollar.

The People's Bank of China (PBOC) said its probe of bitcoin exchanges BTCC, Huobi and OKCoin was to look into a range of possible rule violations, including market manipulation, money laundering and unauthorized financing. It did not say if any violations had been found.

Chinese authorities have stepped up efforts to stem capital outflows and relieve pressure on the yuan.

While the yuan lost more than 6.5 percent against the dollar last year, its worst performance since 1994, the bitcoin price has soared to near-record highs.

That, and the relative anonymity the digital currency affords, has prompted some to believe bitcoin has become an attractive option for tech-savvy Chinese to hedge against the yuan and skirt around rules limiting how much foreign exchange individuals can buy each year.

The PBOC in Beijing, where officers visited the offices of OKCoin and Huobi on Wednesday, said in a statement that "spot checks were focused on how the exchanges implement policies including forex management and anti-money laundering".

Separately in Shanghai, the PBOC said it visited BTCC, noting its checks "focused on whether the firm was operating out of its business scope, whether it was launching unauthorized financing, payment, forex business or other related businesses, whether it was involved in market manipulation, anti-money laundering or (carried) fund security risks."

On the Europe-based Bitstamp exchange, the price of bitcoin BTC=BTSP fell as much as 12.5 percent to a 3-week low of $800.   Continued...

 
A Bitcoin logo is displayed at the Bitcoin Center New York City in New York's financial district July 28, 2015. REUTERS/Brendan McDermid