PBOC Lists New Rules for Chinese Bitcoin Exchanges – Featured Bitcoin News


PBOC Lists New Rules for Chinese Bitcoin Exchanges

The People’s Bank of China (PBOC) renewed its efforts to regulate bitcoin exchanges this week. Zhou Xuedong, Director of the Bank’s Department of Business Management, which carried out inspections of bitcoin exchanges, outlined some new rules which exchanges must follow.

Also read: Reserve Bank of India Predicting the Future of Bitcoin 

PBOC Adopting a ‘Forgiving Attitude’

Zhou, who is also a deputy to the NPC (National People’s Congress), the national §PBOC Lists New Rules for Chinese Bitcoin Exchangeslegislature of the People’s Republic of China, reportedly revealed the short and long term plans that the PBOC has for bitcoin exchanges. The Chinese media outlet Sina reported him saying that in the short term, clearly defined rules for bitcoin exchanges are necessary. They must establish risk prevention and mitigation policies, and they must be kept under strict supervision, he continued, adding that:

[The regulators] shall adopt a forgiving attitude, not be prohibitive for the time being, and set an observation period.

List of Prohibited Activities

Among the numerous rules Zhou proposed was a list of prohibited activities imposed on bitcoin exchanges. According to Caixin, this list includes:

1. Offering leverage and margin trades.
2. Producing fake volume and manipulating the market using zero fees.
3. Violating AML laws.
4. Violating regulations on foreign currency management and cross-border capital transfer with bitcoin.
5. Replacing fiat by using bitcoin to purchase goods.
6. Tax Evasion.
7. Engaging in false advertising or participating in Ponzi schemes.
8. Providing financial services without a permit, including credit, securities, and futures trading.

There will be penalties and fines for any bitcoin exchanges found to be in violation of these rules, Zhou warned, adding that they can be suspended or forced to withdraw from the market. Serious violators can even be forced to shut down their businesses.

Long-Term Regulatory Plans

Caixin also reported Zhou saying that bitcoin is “a special digital asset that is difficult to be controlled” given its characteristics such as anonymity, being globally distributed and having no physical entity. He said that the PBOC will research the properties of bitcoin, explore management policies for the exchanges at the national level, and also consider licensing a number of qualified exchanges.

The NPC Deputy then proposed a “calm and rational” approach when looking at bitcoin, noting that:

If oversimplified measures such as closing them down were taken, [investors] will be led into the underground black market or OTC markets, which are more difficult to control. Therefore, it is necessary to explore the establishment of long-term regulatory mechanisms.

He was also asked by a Caixin reporter whether the inspections of bitcoin exchanges could be extended upstream to suppliers or downstream to customers. Zhou replied: “From thePBOC Lists New Rules for Chinese Bitcoin Exchanges angle of AML, it is mostly the downstream that should be considered, including withdrawing bitcoin and withdrawing fiat currency. This is a critical step“.

Also, Zhou listed other aspects for exchanges to consider, including account identification, funding sources, capital flows, and abnormal transactions. He sees beneficial uses for blockchain technology, believing that it can be used for reference and for regulating the flow of bitcoin and fiat currency. He suggested how data from exchanges to regulators can be synchronized as the basis for regulation. “And with this data, some of the money laundering information and abnormal transactions can be identified”, Zhou told Caixin.

What do you think of the PBOC’s rules for bitcoin exchanges? Let us know in the comments section below.

Images courtesy of Shutterstock and PBOC; Translation by Bitcoin.com’s correspondents in China

Tags in this story
AML, bitcoin exchanges, China, Margin Trading, PBOC, Regulations, rules, Zhou Xuedong

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Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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