[2013-12-05]China Bans Financial Companies From Bitcoin Transactions

[goxed]

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.

[Dusty]

So this seems the cause of this sudden crash.

[eldentyrell]

Seriously, when I predicted this happening, 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

[goxed]

Seriously, when I predicted this happening, 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?

[bryant.coleman]

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?

[Welsh Miner]

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?

[eldentyrell]

Seriously, when I predicted this happening, 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?

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.

[Welsh Miner]

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.

[goxed]

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

[Welsh Miner]

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?

[laowai80]

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?

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.

[hacknoid]

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?

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.

[solex]

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!

[bitcool]

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.

[Carlton Banks]

Seriously, when I predicted this happening, 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

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

Allowing bitcoin purchases amounts to effective capital account convertibility for RMB, so either they change a 20+-year policy (which they've been saying they'll change "in just a few years" since 1995 or so but never seem to get around to it) or they crack down on bitcoin.  One or the other.

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.

[Martijnvdc]

Seriously, when I predicted this happening, 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

Everyone was well aware this would happen long before today.

[laowai80]

Seriously, when I predicted this happening, 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

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

Allowing bitcoin purchases amounts to effective capital account convertibility for RMB, so either they change a 20+-year policy (which they've been saying they'll change "in just a few years" since 1995 or so but never seem to get around to it) or they crack down on bitcoin.  One or the other.

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.

+1

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

[VolanicEruptor]

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

[StarfishPrime]

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

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

[GenTarkin]

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