China will close digital currency brokers. False or true news?
The prohibitionist bias of the Chinese government is nothing new to anyone in the world. In that country, Google, Facebook, Twitter and even the import of some types of cheese is prohibited.
On Friday, September 8, China was in the limelight of the worldwide crypto-currency market, when the Chinese website Caixin published in Mandarin a report claiming that Chinese regulators had decided to ban the operation of currency brokers digital images.
Being the country that dominates the mining of bitcoin and several other digital coins, in addition to having a large and vibrant community of users of technology, the news began to spread around the world and caused panic in the markets. In China, there was a 21% drop in the price of bitcoin.
The People's Bank of China (PBoC) and a number of other government entities also published an English version of the communique on tightening regulation of the crypto-coins sector on Friday. The document, which can be read in its entirety here, caused a split between the Western community.
On the one hand, some have seen passages in the text that give, rather, to understand that the regulatory directive will affect the negotiation of bitcoins per local currency, the yuan. However, there are those who believe that the notice only deals with the Initial Coin Offers (ICOs) ban.
Let's look at the document and the evidence from each side.
The title of the document says:
Public Notice of the PBC, CAC, MIIT, SAIC, CBRC, CSRC and CIRC on Preventing Risks of Fundraising through Coin Offering
Apparently, it is a document that aims to prevent risks related to the raising of resources through the supply of currencies. However, the content of the document leaves room for several interpretations, as we will see below.
In the sequence, we have an opening section which points out that the ICOs have broken the economic and financial order of the country and, in order to protect the legitimate rights and interests of investors, in addition to managing financial risks, measures will be put in place to ban financial institutions and illegal financial deals. The first of a total of six items in the paper tries to explain that coin offerings financed by virtual currencies, such as Bitcoin or Ethereum, are illegal and unauthorized. Then he tells what types of criminal activity these offers can be framed. The document then says that the relevant authorities will closely monitor developments on the issue and will strengthen coordination with local judicial and government departments to stop market irregularities.
The second item states that as of the date of publication of the communiqué, that is, September 8, ICOs are banned and that organizations that have completed procedures for raising funds through the provision of currencies must take steps to return funds to investors.
In the third and most controversial item, we have the following excerpt:
From the date of release of this Notice, any so-called platform that provides trading and exchange services for currency will not engage in trade between legal tender and token or "virtual currency"; or engage in proprietary trading activities or trading as an (sic) central counterparty of tokens or "virtual currencies"; or provide pricing services or information intermediary for tokens or "virtual currencies".
It is in this section that the community is divided among those who believe that this document was intended to deal specifically with the ICOs and those who interpret the passage in bold as a prohibitionist directive for trading in platforms, ie exchanges, tokens or currencies virtual communities.
The sentence is not very clear and objective due to the semicolon placed in the middle of the text. But the following interpretation can be made:
"Any supposed platform should not engage in proprietary trading or trading as a central counterpart of digital tokens or coins."
On Friday, September 8, China was in the limelight of the worldwide crypto-currency market, when the Chinese website Caixin published in Mandarin a report claiming that Chinese regulators had decided to ban the operation of currency brokers digital images.
Being the country that dominates the mining of bitcoin and several other digital coins, in addition to having a large and vibrant community of users of technology, the news began to spread around the world and caused panic in the markets. In China, there was a 21% drop in the price of bitcoin.
The People's Bank of China (PBoC) and a number of other government entities also published an English version of the communique on tightening regulation of the crypto-coins sector on Friday. The document, which can be read in its entirety here, caused a split between the Western community.
On the one hand, some have seen passages in the text that give, rather, to understand that the regulatory directive will affect the negotiation of bitcoins per local currency, the yuan. However, there are those who believe that the notice only deals with the Initial Coin Offers (ICOs) ban.
Let's look at the document and the evidence from each side.
The title of the document says:
Public Notice of the PBC, CAC, MIIT, SAIC, CBRC, CSRC and CIRC on Preventing Risks of Fundraising through Coin Offering
Apparently, it is a document that aims to prevent risks related to the raising of resources through the supply of currencies. However, the content of the document leaves room for several interpretations, as we will see below.
In the sequence, we have an opening section which points out that the ICOs have broken the economic and financial order of the country and, in order to protect the legitimate rights and interests of investors, in addition to managing financial risks, measures will be put in place to ban financial institutions and illegal financial deals. The first of a total of six items in the paper tries to explain that coin offerings financed by virtual currencies, such as Bitcoin or Ethereum, are illegal and unauthorized. Then he tells what types of criminal activity these offers can be framed. The document then says that the relevant authorities will closely monitor developments on the issue and will strengthen coordination with local judicial and government departments to stop market irregularities.
The second item states that as of the date of publication of the communiqué, that is, September 8, ICOs are banned and that organizations that have completed procedures for raising funds through the provision of currencies must take steps to return funds to investors.
In the third and most controversial item, we have the following excerpt:
From the date of release of this Notice, any so-called platform that provides trading and exchange services for currency will not engage in trade between legal tender and token or "virtual currency"; or engage in proprietary trading activities or trading as an (sic) central counterparty of tokens or "virtual currencies"; or provide pricing services or information intermediary for tokens or "virtual currencies".
It is in this section that the community is divided among those who believe that this document was intended to deal specifically with the ICOs and those who interpret the passage in bold as a prohibitionist directive for trading in platforms, ie exchanges, tokens or currencies virtual communities.
The sentence is not very clear and objective due to the semicolon placed in the middle of the text. But the following interpretation can be made:
"Any supposed platform should not engage in proprietary trading or trading as a central counterpart of digital tokens or coins."
Comment:
Chinese ban on crypto currency, BTC still bearish.
Comment:
Bitcoin is trading at $2,500 in China now a 30% difference