[2017-04-25]‘Rectification Plan’ for Chinese Bitcoin Exchanges Leaked

[cliffording]

On Monday, Chinese publication 8Btc posted a translation of a document that contained supposedly leaked “rectification guidelines” for bitcoin exchanges. “It’s the first time the document that’s given rise to the regulatory storm on bitcoin exchanges was exposed to the public,” according to the publication.
State Council’s Plan
The State Council is the chief administrative authority of China, chaired by the Premier and includes the heads of each governmental department and agency. The People’s Bank 'Rectification Plan' for Chinese Bitcoin Exchanges Leakedof China (PBOC) is one of the 35 departments and agencies constituting the State Council.

On October 13, 2016, the State Council released to the public “the Plan to Implement Special Rectification Work on Internet Finance Risks.”

The leaked document references the October implementation plan by the State Council (No. 21) as well as a notice by the PBOC and 17 other ministries (No. 281) published in December last year. It then states that:

Rectification work is conducted on bitcoin exchanges.
‘Rectification Guidelines’ for Bitcoin Exchanges

The leaked document has 10 sections. The images of the original document can be found on Hexun.com, one of China’s largest financial information portals. They were reportedly first posted by a Wechat user. “This guideline applies to all bitcoin trading platforms that are found across the country,” the first part of the document reads. It continues:

The purpose is to crack down and abolish illegal financial operations on bitcoin exchanges, to maintain the order of bitcoin market, to prevent financial risks and to protect investors’ interests.
read more:https://news.bitcoin.com/rectification-plan-chinese-bitcoin-exchanges-leaked/

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[Slow death]

1. Do not engage in fiat and bitcoin lending.
2. Transaction fees must not be zero.
3. Do not engage in money laundry.
4. Do not violate relevant regulatory requirements on foreign exchange management.
5. Do not engage in illegal payment business.
6. Do not engage in business operation beyond the scope stated on the business license.
7. Do not violate industrial and commercial advertising and other laws and regulations.
8. Do not violate laws and regulations of national securities and futures.

First, the exchange’s basic business information needs to be verified, including its registered capital, operating entity, shareholder structure, and related businesses. Second, specific details of its operations need to be disclosed, including the amount of deposit and withdrawal from 2016 to present date of 2017, the amount and quantity of transactions, rates and fees and its bitcoin trading model.

Third, the inspector must determine whether the exchange has violated any relevant provisions as an exchange platform such as the use of standardized contracts and whether the order book is matched electronically. Fourth, it must be determined if the exchange is engaged in illegal financial businesses such as offering margin loans, futures trading, payment, exchange and other services without authorization.


'Rectification Plan' for Chinese Bitcoin Exchanges LeakedFifth, the inspector must determine if the exchange has a sound anti-money laundering system. This includes establishing customer identity information and transaction record storage system as well as establishing a system for reporting on large and suspicious transactions.

In addition, the inspector must also verify the exchange’s procedure regarding customers’ funds including determining the balance of the funds, the use of the funds, and the establishment of a third-party custody system.

It seems to me that now opening an exchange will not be as simple as in the past.

I already expected this

[wanderful2]

Autually, whatever the Chinese government rules, Chinese will follow. Because we do believe Chinese government is doing good to us. Jihan Wu also agreed that Chinese government won’t aggressively regulate bitcoin and they just want to control the risk for those investors who don’t have enough knowledge about bitcoin.

[cliffording]

‘Rectification’ and perhaps re-education sounds promising, doesn’t it? They never change, it’s all about CONTROL.

[Arcteryx]

But this is just another way to say regulation even further then what they have had their hands in the pot for years now.
This is just coming to light now and it is matter of time before it all collapses on their heads.

[classicsucks]

Those regulations sound a lot like USA's AML and KYC regulations. Not a huge deal but it will move markets.

[1Referee]

‘Rectification’ and perhaps re-education sounds promising, doesn’t it? They never change, it’s all about CONTROL.

Of course. After all, it's China that we're talking about. Everything that gives the ordinary person too much power and freedom will get smashed back to the ground again. I must however state that I am actually happy that they went nuts on Chinese exchanges. People were sick and tired of all the manipulation and fud coming from China. Chinese exchanges are insignificant now, and that's something filling me with great joy.

[Iranus]

‘Rectification’ and perhaps re-education sounds promising, doesn’t it? They never change, it’s all about CONTROL.

Despite you seemingly not realising that rectification is supposed to be sorting something out rather than messing it up, I somewhat agree with you.

I wouldn't really pin this on the Chinese government too much though, more governments in general.  In the current system increased Bitcoin awareness is going to be bad for governments as it can be a good way to launder money and in some cases illegal activity, fraud, or tax evasion.  I'm surprised America haven't gone much further yet, but who knows what they're doing behind the scenes.