China Clamps Down On Bitcoin Sends Price Plunging – ValueWalk
It was really only a matter of time before the Chinese authorities decided to crack down on one of the last remaining avenues of capital flight from the country.
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As regulators have increased their grip around Chinese citizens and businesses in an attempt to stem capital outflows from the country and stabilize the yuan, the lack of action against entities that control the supply of bitcoins has been notable. As the state has moved to clamp down on other traditional methods of taking capital out of the country bitcoin has remained untouched and it’s clear that China’s citizens of been taking advantage of this loophole.
The cyber currency gained 120% last year and rallied more than 20% during the first three trading days of 2017. Analysts have speculated that Chinese citizens desperately looking for any way to withdraw money from the country have been responsible for this rally.
China Clamps Down On Bitcoin Sends Price Plunging
Over the past few weeks, the Chinese policymakers have moved to further clampdown on capital outflows from the country by further restricting the amount of cash citizens can take out of the country. While the amount of cash remains unchanged at $50,000 or equivalent, citizens wishing to exchange any currency must give authorities a detailed explanation why. It is thought these new restrictions are designed to clamp down on movements by wealthy Chinese to pull money out of the country by using inventive methods such as gambling and the purchase of insurance products in Hong Kong.
Bitcoin seems to have been a major beneficiary from the clampdown by Chinese policymakers but now authorities have targeted this remaining hole in the system. According to Reuters, earlier in the week the People’s Bank of China announced that it is probing bitcoin exchanges BTCC, Huobi and OKCoin as it believes they have committed a range of possible rule violations including market manipulation, money laundering and unauthorized financing. Immediately after this announcement from China’s central bank, the value of bitcoin collapsed by 15% extending declines that initially began towards the end of last week after the PBOC warned investors to exercise caution when investing in virtual currencies. The cryptocurrency has lost roughly 30% of its value over the past four trading sessions.