China to shut down domestic bitcoin exchanges, will not ban OTC trading

China to shut down domestic bitcoin exchanges, will not ban OTC trading

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The Chinese government is planning to shut down the domestic bitcoin exchanges, according to a report of Bloomberg.

The news comes days after the local authorities banned ICOs and is expected to deal another blow to the soaring digital currencies market, currently valued at around $150 billion.

According to Bloomberg, quoting own sources wishing to remain anonymous, the ban will only apply to exchange trading, but not to over-the-counter trading.

Even though the motives for the government decision are not yet entirely clear, most likely it is trying to clap down on price speculation and betting against the Yuan.

Another media source, The Verge, quotes different sources claiming that either the decision on the ban has already been taken, or that it will still take a few months.

Either way, the news has brought the Bitcoin price down to $4108 on September 11, but it has since recovered somewhat. In the past year the price of Bitcoin has risen 600%.

China is home to some of the major Bitcoin and Ethereum mining operations and several of the largest digital currency exchanges like Bitfinex, OkCoin, and BTCC who made up over 45% of the global market share over the last 30 days, so the ban would most likely affect the market. “Trading volume would definitely shrink,” Zhou Shuoji, Beijing-based founding partner at FBG Capital, which invests in cryptocurrencies, told Bloomberg. “Old users will definitely still trade, but the entry threshold for new users is now very high. This will definitely slow the development of cryptocurrencies in China.”

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