China’s Largest Bitcoin Exchange Seeks Recognition for Currency
BTC China, the nation’s largest Bitcoin exchange, has had low-level discussions with regulators seeking recognition of the digital currency that would allow it to be used to buy goods and services in the country.
The company has sought to discuss Bitcoin regulations with officials from agencies including the People’s Bank of China, the China Banking Regulatory Commission and the China Securities Regulatory Commission, BTC China Chief Executive Officer Bobby Lee said in a Nov. 29 interview in Shanghai. It’s not yet been able to arrange any high-level meetings, he said.
“They’ll ask us ‘how should you be regulated,’ and I’ll say ‘Hey, here’s what we’ve done proactively and here’s how we think you should regulate us,’” Lee said of the Shanghai-based company’s talks with regulators. Bitcoin is “not on the black list and it’s not on the white list. It’s in the gray area.”
The growth of Chinese investments in Bitcoin has come amid concerns that regulators may ban trading of the electronic currency. That was eased this month when deputy central bank governor Yi Gang was cited by the 21st Century Business Herald as saying that people were free to trade Bitcoin even as China refrains from recognizing it as a currency in the short term.
“This is very different from six months ago when I was very much unsure of Chinese opinion,” Lee said of Yi’s comments on Bitcoin.
The value of Bitcoin, which is not regulated by any country or banking authority, soared 80-fold from a year ago and traded at $1,000 apiece at 10:09 a.m. in Shanghai on BitStamp, an Internet-based exchange where Bitcoins are traded for dollars, euros and other currencies. It was quoted at 7,491.03 yuan ($1,230) on BTC China, which was set up in June 2011 as the first trading platform for the digital currency in the nation, according to its website.
The closure of some Bitcoin exchanges, resulting in investor losses, has fueled concerns that authorities may ban trading of the digital currency. GBL, an online trading platform that attracted almost 1,000 Chinese investors, was shut down Oct. 26, leaving investors with losses of as much as 25 million yuan ($4.1 million), the Hong Kong Standard reported.
The average life span of a Bitcoin exchange is about 380 days, with half of exchanges closing within a year of their opening, BTC China’s Lee said.
China will continue to monitor Bitcoin development in the long term, Yi was cited by 21st Century Business Herald as saying. Bitcoin may support China’s financial reforms given the nation’s desire to promote other currencies beyond the U.S. dollar for trade, Zennon Kapron, managing director of financial consultancy Kapronasia, said in a Nov. 28 interview in Shanghai.
The U.S. Department of Justice said last month the digital currency can be a “legal means of exchange.” at a U.S. Senate committee hearing. The Committee on Homeland Security and Governmental Affairs arranged the hearing after the Silk Road Hidden Website, a trading platform, was shut down in October, and cut the value of Bitcoin by a third. The operator of the site was charged with running a “sprawling black-market bazaar” where anonymous users paid Bitcoin for illegal drugs and phony identification documents.