Bitcoin Forum

http://www.bloomberg.com/news/2013-12-05/china-s-pboc-bans-financial-companies-from-bitcoin-transactions.html

China’s central bank barred financial institutions from handling Bitcoin transactions, moving to regulate the virtual currency after an 89-fold jump in its value sparked a surge of investor interest in the country.

So this seems the cause of this sudden crash.

Seriously, when I predicted this happening (https://bitcointalk.org/index.php?topic=350769.msg3813610#msg3813610), I really didn't think it was going to be in less than 48 hours.  Maybe I should start gambling or something.

  - elden "bitcoin cassandra" tyrell

cassandra is a female name, how about Nostradamus?

It will be interesting to know whether Chinese banks will be allowed to process cash withdrawals by BTC-China users. At this point of time, I think that it will be banned. Can create hardship for the users.. right?

Could it be that the Chinese gov. is worried that bitcoin will take away their tight controls over every aspect of the peoples life.  
Freedom for the people! I can see how the Chinese people will love bitcoin. For one, it can be used as a very volatile (risky and potentially profitable) speculation tool. Secondly, it isn't controlled by any big company either government controlled or government influenced. Which means it has a certain amount of political freedom. I don't know. I am guessing. Am I right?

True, but I have to say I prefer the cassandra analogy since most of my wild and incoherent rants are warnings about stuff that will happen well within my lifetime, usually the next year or two.

And, of course, at least a few people listened to Nostradamus, so I think that nukes the moniker.

Good idea though.

Wow. I am a complete newbie here but this looks to me like a crash happening right now.
From a price of $1200 yesterday it is now bouncing wildly between $920 and 945.

Happens, just put your fishing lines in :)

Now bouncing down to 860 ...This thing is super volatile.  What would be considered a major crash? Halving the value is one of the 4 crashes BC has had from what I read. But it bounces back up quickly.
This indicates that trading is done very quickly but from what I've read here it takes days to make a trade?

Why would they require the exchanges to register and at the same time not allow them to set up bank accounts to do deposits and withdrawals? Doesn't make sense. They only specifically ban financial institutions to transact in bitcoins. An exchange is just a customer of a bank, an exchange is NOT a financial institution. The statement says if you're not a financial instituion, you are free to participate in bitcoin trading, but government doesn't back you up with any guarantees, you take the full risk.

Indeed.  Upon a quick read of the news that is how I take it.  Basically, sounds like they won't let the banks get into it due to the risk they would be undertaking, and rightfully so.  But they said explicitly that individual s were free to transact in it, so it sounds like they are clarifying rules, not banning it outright.

I mean the Chinese banks would never take risks like writing mortgages at 22x annual income!

I was kind of hoping they have a full-blown ban, just to see how effective it can be. Guess won't get  it from Chinese government.

In a country everything is gray, nothing short of a draconian ban across all business segments will be effective.

This is a positive development, it gives legitimacy to bitcoin trading in China, and removed much legal uncertainty for the foreseeable future.

But which prediction are you claiming the ownership to? Here's what you said:


Is this a crackdown, or an explicit change to the currency non-convertibility policy? (which you conflated with capital controls in another part of your analysis)

Neither. The truth is, this move is a strengthening of the separation of Bitcoin and the Chinese state. The non-convertibility policy is not changed, and there is no crackdown on individuals buying, selling or using Bitcoin.

What has happened is that banks and financial institutions have been barred from moving into the industry, and the exchanges are to remain. Try predicting something that actually happens.

Everyone was well aware this would happen long before today.

+1

nobody else bothered to click the link to read the prediction anyway :)

I don't see a bitcoin crash... it's still over $1000 on bitstamp  ???

One man's 'crash' is another man's buying opportunity.

Buying in at these 'post crash' low points has always been a good strategy.

this kinda sucks ... complete 180 of their previous statement on Bitcoin ... =/
This will hinder Bitcoins adoption rate in china ... big time ... ugh...

In China the money is not with the people anyway.  The average chinese bitcoin enthusiast probably have .000001 in their wallet.

This wasn't really unexpected. It basically just brings China in line with most other countries which already require registration of exchanges and require basic KYC/AML procedures like customer ID and reporting of suspicious activity.

US, Japan and many EU countries already have these restrictions in place. No banks in China (or anywhere else, except perhaps one or two) deal with bitcoin anyway so the 'ban' part of the announcement won't really change anything.

The specific statement that individuals may engage in bitcoin trade (..at their own risk) can actually be considered an indication that more restrictions are not likely to follow, at least for now.

Not sure what your expectation was, but I think this is one of the best scenarios I could expect.

Did anyone realistically expect Chinese government would formally recognize Bitcoin as a legitimate currency to compete with RMB? or allowing their banks to directly trade/insure BTC?
 

No, that's why it's not clear what all the fuss is about :)

No it's not, and no it won't.

They went out of their way to restate that they are fine with people using bitcoins for online transactions.  This is just a clarification of the policy for banking institutions.

I seriously doubt that any bank anywhere will ever be allowed to treat bitcoin as equal to the local sovereign currency.

I seriously doubt that. BTC-China was dealing with somewhere around 150,000+ BTC per day. Most of the investors will be having at least 1 BTC.

Was wondering why my buy wall activated got some sub 1000 Lol

Your question is answered in the part of my original post that you deleted (emphasis added):

You'd think so, but a survey of the postings around here last week indicates otherwise.  Maybe bitcointalk isn't the best place to look for reasonable views on this subject :)  In that case maybe the real news isn't "china cracks down on bitcoin" but rather "hordes of bitcointalkers oblivious to writing on wall".

i think thats the point.

http://bitcoinmagazine.com/8744/china-releases-first-regulatory-report-on-bitcoin-businesses/

also chinese exchanges can still operate and do their business. as someone already said: now china has their own KYC and AML rules, like most of all exchanges arround the world already have.

So, you're saying you made 3 predictions altogether, none of which came to pass? You're right, I concur. 

Troll harder, buddy.

Is everything alright, elden? I'm only disagreeing with your view of the situation, you seem excessively pugnacious. Saying that I "deleted" a part of your post is pretty exaggerative rhetoric, whereas I thought my refutation of your points was pretty logical. Maybe I'll not comment on your posts at all, you're almost non-existent on the forum these days anyway!

To understand this, you need to understand China's foreign exchange control system. Here's a summary in English. (http://www.cmslegal.cn/Hubbard.FileSystem/files/Publication/747895b8-11e3-4efe-89d3-131c2ecd3ed0/Presentation/PublicationAttachment/c77da1ee-a236-4c19-a2dd-1c17c1af7f6a/2011_CMSChina_ForeignExchangeControl.pdf)

The PRC foreign exchange system is governed by the following basic principles:
1. RMB, the Chinese currency, is not fully convertible into foreign currency.
2. All payments in foreign currency from the PRC to any destination abroad are in some form controlled or supervised by SAFE. The same applies to the remittance of foreign currency into the PRC.
3. Foreign currency is generally not allowed to circulate or to be used in lieu of RMB in the settlement of accounts within the PRC.

There's also a big distinction in China between "current account" funds and "capital" funds. In general, buying and selling cross-border with current account funds is encouraged, while investment using "capital" funds is highly regulated. Most other countries don't make such a legal distinction.

For a while, Bitcoin appeared to be a legal way around those controls. The new guidance from the PBOC is roughly that, while Bitcoin is allowed for transactions in goods and services, it's not allowed for "financial" operations involving capital funds.  Forbes writes: "The notice says that financial institutions and payment institutions can’t start using bitcoin, or exchange it for RMB, or act as a middleperson for bitcoin payments."

Bitcoin "exchanges" would be considered "financial" in this context. What the PBOC doesn't want happening is people in China buying Bitcoins for yuan and selling them for dollars or euros outside China.

I think this opinion gives the clearest picture:

"Essentially bitcoin exchanges in China and bitcoin itself is going to be treated as a "commodity" rather than a "currency" and therefore not going to be subject to banking and currency control regulations.  The only restrictions on bitcoin exchanges is that they will be subject to the standard internet censorship rules and they will need to get the identity of all users to prevent money laundering.  Existing financial institutions will not be able to trade bitcoin, but this is a *great* thing for entrepreneurs."

http://www.quora.com/China/How-will-Chinas-recent-crack-down-on-Bitcoins-impact-its-near-term-and-long-term-value/answer/Joseph-Wang-9