China-based digital currency exchanges BTCC, Huobi, and OKCoin have updated their margin trading terms over the last 24-hours to reflect new scrutiny from Chinese regulators on cryptocurrency exchanges.
Earlier in the week, a group of regulators consisting of the Shanghai branch of the People’s Bank of China, the Shanghai Financial Affairs office, and other related government agencies visited BTCC’s offices on January 11th, 2017.
BTCC posted on its website the following announcement at the top of their site: Starting from January 12th, 2017, BTCChina has suspended margin loan service.
No specific details from the meetings were revealed but speculation has consisted of probing exchanges to make sure they are following all KYC/AML laws and it obviously looks like the exchanges were told to stop margin lending to traders and investors for the time being.
The increased watchfulness from regulators was blamed from the sharp drop bitcoin experienced from its peak last week around its all-time highs of $1175. However, bitcoin has since settled into a consolidation period around the $800 handle. We will bring further updates from the developments in China as they become available.