China Likely To License Bitcoin Exchanges To Resume TradingOctober 6, 2017 9:31 pm
Xinhua, the state-owned news publication of China, said this week that the Chinese government was concerned with criminal activities surrounding cryptocurrencies after they’ve become the “top choice” for underground economies and said the government was planning on taking measures to regulate the market, according to Cryptocoinews.com.
China will likely resume cryptocurrency trading in the upcoming months using a licensing program called Know Your Customer (KYC) and Anti-Money Laundering (AML) systems.
The People’s Bank of China, local financial regulators, and the Chinese government imposed a nationwide ban on cryptocurrency exchanges last month, provoking the price of bitcoin to fall to $3,000 and igniting tensions across the cryptocurrency market.
The markets have since restructured as many of the trading volumes from China shifted to Japan and South Korea, and as the Japanese government authorized 11 cryptocurrency exchanges in the same month.
Thanks to those two factors, the price of bitcoin has recovered and since remained above the $4,000 margin.
The Chinese government’s ban also created an increase in trading volumes of over-the-counter (OTC) markets and peer-to-peer trading platforms, which confirmed the concerns of the Chinese government since traders would be able to exchange cryptocurrencies and trade the Chinese yuan without the control or involvement from Chinese authorities.
Xinhua said that the government was considering similar regulation like Japan with the possibility of licensing and creating record-keeping cryptocurrency trades, according to CnLedger, a trusted cryptocurrency news source in China.
“Xinhua News, official press agency of CN: Virtual currencies have become the top choices of underground economies. We shall adopt ‘0-tolerance policies’ towards crimes hidden underneath and take measures such as record-keeping, licensing, AML processes, real-name, limiting large transactions,” CnLedger wrote.
China needs to have the regulatory infrastructure in place to oversee payments and identify cryptocurrency users to avoid criminal activities, since it’s impossible to have a zero-tolerance policy on cryptocurrency crimes without KYC and AML systems.
Xinhua said that the cryptocurrency ban in China is likely only temporary while the government releases a stricter record-keeping, licensing, and AML policies for trading platforms.
“The ban did not stop them [Chinese investors] from buying cryptocurrencies. In the last few weeks, we have seen a lot of mainland customers opening up accounts at TideBit. They still want to play the game. I see a growing need in that they will come to Hong Kong or Singapore to buy cryptocurrency,” said Terence Tsang, chief operating officer at TideiSun, the parent company of TideBit.
–WN.com, Maureen Foody