China Should Reduce Bitcoin Risks, Give Domestic Exchanges a Chance, NPC Deputy Says

Yicai

2017-03-29

(Yicai Global) March 29-- Regulators should cut back the risks involved in China’s domestic bitcoin market but give platforms a chance before outright banning them, said Zhou Xuedong, deputy of the National People’s Congress and director of the central bank’s business management department.

Regulators should set a bottom line for bitcoin platforms, create a blacklist of non-compliers and ensure the prevention and resolution of short-term risks, Zhou said at the NPC. In the long term, they should study international systems to create policies that promote financial stability, he said.

Zhou identified six main problems in the market: protection of customer funds, money laundering, leveraged transactions, false advertising, technical security and general business risk.

Regulators should remain tolerant of the platforms and offer a probation period rather than banning them, he said. Strict supervision in the short term is a must, he added.

The ease of transferring money internationally made bitcoin a popular method for people to shift yuan out of the country while the dollar rallied. By law, Chinese citizens may only transfer the equivalent of USD50,000 overseas a year. Over the past few months, a number of platforms suspended bitcoin withdrawals, or tightened restrictions, after meeting with regulators.

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