China To Shut Down Cryptocurrency Exchanges

Bitcoin, the popular cryptocurrency, is facing increased scrutiny from government regulators in China, which are reportedly gearing up to close Chinese bitcoin exchanges.

According to a report in Bloomberg, citing Chinese financial news website Caixin, the government has issued a document for local Chinese regulators to launch a shutdown of the exchanges. This decision resulted in a decline in the price of the cryptocurrency late last week. Some of the Chinese bitcoin exchanges contacted by Bloomberg, including Huobi.com and OKCoin, had not yet received notification from regulators over the weekend. It’s not clear how the order is being conveyed to the exchanges, noted the report.

This is the latest in a series of steps by regulators in China to clamp down on the surging cryptocurrency market. Earlier this month, China put in place an immediate ban on funding of initial coin offerings, or ICOs, for bitcoin and other blockchain-enabled cryptocurrencies. TechCrunch reported at the time that the nation’s central bank claimed ICOs have “disrupted the economic and financial order.”  

The regulations come as the controversial fundraising activities have drawn widespread media attention, and no small share of scams. The industry itself, said CNBC, is worth hundreds of millions of dollars. As noted by Chinese-language financial news site Caixin, the order was handed down by a committee studying internet-based financial risk, which offered up a list of 60 exchanges that will be inspected and reported on. The freeze remains in place until then.

Seven government administrations said jointly that the ICO exists as an unauthorized fundraising effort that may, in fact, be tied up in scams. The roster of government entities issuing that statement included the People’s Bank of China and the China Banking Regulatory Commission, among others. The statement also warned that financial institutions should not be involved with ICO trading activity. Individual investors and firms that have, in fact, completed ICOs and raised funds should get ready to give those funds up, per the statement, as CNBC noted.