It was announced today from two major Chinese bitcoin exchanges OKCoin and Huobi that they have suspended bitcoin and litecoin withdrawals to users for a month. Furthermore, BTCC, the most popular exchange by volume announced that the exchange would upgrade its back-office systems to make sure they are prudent about complying with new scrutiny and current withdrawals could take 72 hours to process.
The sudden announcements come after more closed-door meetings this week from Chinese financial regulators. Regulators decided that the exchanges would have to demonstrate strict compliance with anti-money laundering laws and thus withdrawals were announced to be on hold for a month, while the reviews work themselves out with the exchanges mentioned above.
The People’s Bank of China (PBoC) has increased probing and oversight of exchanges since last month, widely noted to be concerned about people fleeing a weak renminbi regime in order to preserve purchasing power as people within the country are flocking to Bitcoin, the leading digital asset and currency as its steadily risen in reaction to the perceived weak foreign exchange policy goals by the PBoC among other factors.
It was announced by the PBoC late Wednesday night they had met with smaller bitcoin exchanges throughout the country and repeated warnings about margin lending and leveraged trading of bitcoin and other cryptocurrencies. The PBoC said the nine exchanges involved in the Wednesday meeting were CHBTC, BtcTrade, HaoBTC, Yunbi, Yuanbao, BTC100, Jubi, BitBays and Dahonghuo. The most popular platforms and exchanges have already halted margin trading for clients after they received visits from the same regulators last month.
If common sense regulation like that of which is being constructed in Japan, can be provided in China, the stepped up oversight of the digital currency platforms and exchanges in mainland China will be a good thing as it further legitimizes the free market digital currency economy.
As expected on such headline risk, the developments today in China caused bitcoin to sell off swiftly back under $1,000 from its 24-hour high of $1,080. The currency is currently trading down to $950 late Thursday evening New York time. Support can be seen at major levels such as $900, $800, and a big Fibonacci 38.2% retracement level from the 2017 high and 2016 low of $700. Resistance upwards comes in at $1100 and the all-time highs near $1175-$1200.