The bitcoin fury is back as exchanges for the digital currency find ways to work around regulators. On Japanese exchange Mt. Gox, bitcoins hit a high of $1,093, while on U.S.-based exchange Coinbase, they traded at around $938. On BTC China, the world’s largest exchange because of high demand in China, the digital currency was trading at right around $1,000 this morning.
China shores up bitcoin value
Last month, bitcoin buyers in China were told they wouldn’t be able to use digital payment platforms to put cash into exchanges. In essence, that regulatory decision barred Chinese from buying bitcoins. The main reason the price of bitcoin came crashing down was because of demand in China, so this renewed demand has naturally caused the price of the digital currency to inflate once again.
Simon Rabinovitch of the Financial Times reports that major bitcoin exchanges have come up with some ways to get around the regulatory decision in China, some of which are “in legal grey areas.” BTCtrade, still reportedly uses a third-party payment system even though links like this one have been banned by Chinese regulators. A representative for the company said their payment provider hadn’t officially received a regulatory notice, so it was still active.
At the 2021 SALT New York conference, which was held earlier this week, one of the panels on the main stage discussed the best macro shifts coming out of the pandemic and investing in value amid distress. The panel featured: Todd Lemkin, the chief investment officer of Canyon Partners; Peter Wallach, the managing director and Read More
Looking for bitcoin loopholes
A number of other major bitcoin exchanges have looked around for some loopholes. Huobi, which is based in Beijing, allows direct deposits from users right into its own corporate bank account. The exchange even allows them to deposit cash into the personal account of founder Li Lin. From there, the company then takes the cash into its exchange to buy bitcoins. Li told the Financial Times that what they are doing is “totally legal.”
Smaller exchange OkayCoin has devised a workaround similar to what Huobi is using. However, BTC China has created its own workaround.
BTC China creates voucher system
BTC China has built a sort of voucher system because management believes using a corporate account for deposits might not sit well with regulators. The system enables those who have money in its exchange sell the right to their cash to anyone who wishes to purchase bitcoins.
The exchange also showed off a new incentive over the weekend which enables anyone who deals in bitcoins to earn a little bit of cash. That incentive may be accounting for a significant part of this week’s boost in the value of the digital currency.
China blocks bitcoin purchases
There is still a hurdle which Chinese bitcoin exchange must cross, however. While many U.S.-based companies are now accepting bitcoins as a form of payments for purchasing goods or services, China’s central bank has blocked this. Zynga Inc (NASDAQ:ZNGA)’s decision to start accepting bitcoins as payment could also be having an effect on their value. The online gaming company isn’t the only Internet company accepting the digital currency. Overstock.com, Inc. (NASDAQ:OSTK) announced last month it would start accepting bitcoins last year, while other Internet companies made the announcement previously However, China’s major Internet companies are no longer allowed to accept bitcoins.