The price of bitcoin is down following a report that China may ban all cryptocurrency exchanges within its borders.
On Friday, Chinese financial news outlet Caixin reported that the Chinese government is considering banning all exchanges between bitcoin, ether, and other cryptocurrencies, and the Chinese yuan. Immediately following this report, the price of bitcoin dropped by 6.6 percent. On Monday morning, it was trading at $4,170 US, and then at $4,108 US — down from nearly $5,000 US on September 2nd, just before China outright banned ICOs.
At this time, there has only been a single report on this decision: that from Caixin.
Neither China’s Central bank, nor BTC China, one of the county’s largest exchanges, have yet issued a comment on this development.
Not only bitcoin, but all cryptocurrencies would stand to suffer from the banning of cryptocurrency exchanges in China. In theory, cryptocurrencies are only useful so long as it is possible to exchange them with other cryptocurrencies, or with standard, fiat currency. Banning exchanges could render them useless.
Yet, there is uncertainty about exactly how detrimental a potential Chinese ban on local exchanges might be in practice.
Chief Executive of cryptocurrency trading platform BitMEX, Arthur Hayes, predicted in an interview with Reuters that, if the ban were to be enacted, “the price [of bitcoin] would drop below $4,000, or the price of the U.S. dollar price of bitcoin would catch up to where it’s trading equivalently in China.”
Yet another analyst told CNBC that China’s ban would not affect the worldwide cryptocurrency market greatly, because China “isn’t that important.”
Additionally, as one cryptocurrency investor pointed out in an interview with Reuters, the Chinese government’s ability to control the cryptocurrency market is limited. “I think there is too much money to actually stop people from trading,” he said, “The best they could do is ban exchanges, but people will just use VPN (virtual private network) or find another way.”
Regardless, this single report that the Chinese government may, potentially, ban all cryptocurrency exchange has placed the global market in a standstill, as investors await clarification from the country’s regulatory agencies.2 - Readers Like This Post