the China PBOC event explained

[zhangweiwu]

Unlike in the western world, PBOC doesn't have the disclosure obligation. The recent event is a notification to the banks, to stop and close the trading account used by 15 named exchanges to receive deposite and send withdraw.

The notification was never meant to go to main stream media. In smaller cases too paltry for media interes, I expect, sometimes the bank account holder may simply gets confused why his account is closed, and finds no one can answer. A kind official may explain that "you know what I mean", implying there are higher orders. I'll divert the topic a minute for "you know what I mean": it is a famous quote. In a recent press conference, foreign medias are told they are forbidden to ask about Zhou Yong Kang. A journalist however asked, putting his/her news agency at risk. The spokesman said he doesn't know, and "you know what I mean" i.e. you know you are forbidden to talk about it and you know I am too.

This is to give an idea that notifications is not for the public, although PBOC may be aware that it will be on the news anyway. Notifications are not treated as secret neither, only 'internal information'. The notification was issued, according to Caixin, "around mid of March", so it has been a while. Remember that there were speculation why the supposely-fake news of China ban held down the market for longer than it should? Various speculation were there and I don't buy any of them †- seems it is because that some players in the market knows the 'notification',  people who know more than I do. I've been acepted and deleted out of some seasoned investor's QQ group for a few rounds, and no one answers me why, otherwise I might have known more info before this hard crash - did I speak in English about China too much?
† https://bitcointalk.org/index.php?topic=524820.msg5848910#msg5848910

Caixin said they confirmed the 'notification'.‡ Du Jun (co-founder of Huobi) said that 80% of the chance the news being untrue.  Caixin is a reputable financial media in China. I'll believe Caixin's report for now. In the report it mis-quotes that China makes up 60% of the BTC trade world wide, while I guess the reality is less than 40%, 15 to 25% is a reasonable guess. But Caixin's ignorance of China's trade volume doesn't mean they'd risk misreporting PBOC.
‡ http://finance.caixin.com/2014-03-27/100657253.html

So what's the impact? Price was 520USD this Chinese morning. I am surprised the price only went down by this far. In comparison, 18th Dec PBOC news press made a 35% drop and this ban is harsher than that. Perhaps the people are waiting for a formal press release from PBOC, perhaps they ain't scared enough. After 18th Dec the Chinese bag holders are all long term investors, motivated by the dream of prosperity and wealth, but any long term investors dreaming of wealth are not long term investors, i.e. they look at the reward (of their effort, belief and sacrifices), not value (of their wise choice). I expect them to dump more; too much emotion are attached to BTC investments here. There is going to be a huge transfer of digital wealth from the east to the west. Read my other post about investor sentiments:
https://bitcointalk.org/index.php?topic=510829.msg5639435 (a continued inspection of China )

Chinese people have little believe that the government does anything in their interest. If, after the saga, Bitcoin rises again, Chinese players will feel that the government robbed them away the chance to be rich, once again! This is a perfect backdrop for P2P trading network, or "blackmarket" as our government would like to call it. It is a very good opportunity to develop p2p trading software that links online and offline world. PBOC did not ban Bitcoin trades, only bans Bank's involvement, 'cos banning the trade requires other government sector to work with PBOC. With bank involvement removed, this is a good opportunity to test whether Bitcoin really can replace Banks on payment processing, deposite, transfer, settlement and foreign-exchange. (It cannot replace Bank for lending, because Bitcoin is a hard limited currency, not suitable for usury, but that need is secondary.)


On a interesting side note, Bitfinex, an exchange based in Hong Kong, is not on the ban list. Does that mean PBOC have no jurisdiction over Hong Kong? Can someone knowledgable verify this? If so, we should be seeing massive move to Hong Kong soon.

Mind you the Exchange-Run (like Bank-Run) will reveal the insolvency of some Chinese exchanges, which may trigger another crash, depending on the size of the debtor.

P. S.

I'll quote myself when one of my background homework revealed to be true:

Myth: Like Hong Kong, Shanghai Free Trade Zone respects rules

Reality: Hong Kong maintained its system because people defend it as a bottom line: it is not rules that worked, it is people that worked (to defend rules). Our government never liked that HK culture but cannot simply chop it. There is no similiar culture background in Shanghai. Shanghai Free Trade Zone is where various new things are allowed to live longer so that the government can see what kind of fruit it begets, which one benifits, which one isn't, and select what they want; chop off unwanted - like Special Economic Zone we had before. Hong Kong is a free trade zone, Shanghai Free Trade Zone is a controlled experiment. Like all experiment, you the bad seed are allowed to live longer because you are more closely watched. When they feels certain that your bad seed is weed, they won't let it grow.

[Cyberlight]

In the report it mis-quotes that China makes up 60% of the BTC trade world wide, while I guess the reality is less than 40%, 15 to 25% is a reasonable

Currency markets
currency   volume %   volume ฿   last price   cross price
USD   82.38   127,056.95   0.496   USD   0.496 USD
CNY   11.22   17,310.53   2.946   CNY   0.475 USD

https://bitcoinaverage.com/#USD

[jl2012]

Frankly speaking I hope the ban is true. If that's not true it means we could fall into the same cycle indefinitely. What do you think?

[zhangweiwu]

Frankly speaking I hope the ban is true. If that's not true it means we could fall into the same cycle indefinitely. What do you think?

As said, Caixin is the closet thing to "reputable" in China's financial sector. They said they confirmed it, I think hence there are little room to doubt.

[Biodom]

Frankly speaking I hope the ban is true. If that's not true it means we could fall into the same cycle indefinitely. What do you think?

Me too, in a sense of getting some clarity. How many times this ban-unban would continue? As far as % drop-we shall see. Market was probably expecting this to a degree. $400 might hold.
This is a purely defensive move by the chinese authorities who wanted to close the potential leak of capital through bitcoin. If so, it does not bode well for CNY, at least in the near and intermediate future.

[Siegfried]

The rich will still find a way to move their wealth into Bitcoin. The ordinary Chinese citizen will miss out on a great opportunity. Bitcoin will flourish around the world. If 1 percent of the U.S. population (3 million people) buys 1 BTC each, the price will easily be more than 10,000 dollars.

[robertdivaio]

This is the article:
http://jingji.cntv.cn/2014/03/28/ARTI1395963853109425.shtml

And it clearly says that the PBOC released a statement saying that the 15 april bank is untrue:对此，央行官方微博当日发布了微博称“‘4月15日前停止一切比特币交易’为失实报道, 人民银行对比特币的态度已在人民银行等五部委《关于防范比特币风险的通知》中明确表述。”

So why all the fuss? Anyone care to illuminate me on this please?!

[seleme]

I'm not happy for Chinese Bitcoiners as their government idiots are screwing them again but I am happy for Bitcoin world.

Obviously, it would be great if China could be normal for once and Bitcoin to prosper there too but since those lunatics from their government can't be normal than it's better to get rid as soon as possible, and move on.

[jl2012]

Frankly speaking I hope the ban is true. If that's not true it means we could fall into the same cycle indefinitely. What do you think?

As said, Caixin is the closet thing to "reputable" in China's financial sector. They said they confirmed it, I think hence there are little room to doubt.

One reason for me to think this is not completely true because we have only 2 weeks until the deadline. This won't be enough for people to close the accounts. That will only lead to social unrest which they definitely do not want to see.

Also, if the report is true, people should not be able to deposit now, but it is still available

[zhangweiwu]

This is the article:
http://jingji.cntv.cn/2014/03/28/ARTI1395963853109425.shtml

And it clearly says that the PBOC released a statement saying that the 15 april bank is untrue:对此，央行官方微博当日发布了微博称“‘4月15日前停止一切比特币交易’为失实报道, 人民银行对比特币的态度已在人民银行等五部委《关于防范比特币风险的通知》中明确表述。”

So why all the fuss? Anyone care to illuminate me on this please?!

That statement is the backdrop of the precursor mini-crash.  PBOC stated they did not ban Bitcoin trade, hence the early reports are wrong, but Caixin's latest report says PBOC decided to force close the trade accounts of exchanges - hence this 2nd crash. So the ban is true, but incorrectly described, and now we have the correctly described version. PBOC childishly over-reacted to the incorrectly described internal ban, claiming it is fake, at the rage the ban disclosed to media so early.

[TERA]

There will be a probably be a downtrend consisting of spikes down whenever each exchange's bank account (or the exchange itself) actually gets closed. It's not going to happen all at once, because the money flow is still active and there are still people hoping it won't happen.

[zhangweiwu]

One reason for me to think this is not completely true because we have only 2 weeks until the deadline. This won't be enough for people to close the accounts. That will only lead to social unrest which they definitely do not want to see.

Also, if the report is true, people should not be able to deposit now, but it is still available

The notification required closure of 15 companies' accounts, there will be less than 100 accounts to go, there are enough time. And I agree with you that the only thing in doubt is that deposite is still possible. But I will put wage on the professionalism of Caixin this time. That is, I think there are not much room to doubt - unless PBOC rewrite old decisions with new ones that not yet disclosed.

[jl2012]

One reason for me to think this is not completely true because we have only 2 weeks until the deadline. This won't be enough for people to close the accounts. That will only lead to social unrest which they definitely do not want to see.

Also, if the report is true, people should not be able to deposit now, but it is still available

The notification required closure of 15 companies' accounts, there will be less than 100 accounts to go, there are enough time. And I agree with you that the only thing in doubt is that deposite is still possible. But I will put wage on the professionalism of Caixin this time.

But there must be enough time for traders to get their money back, or that will only lead to "un-harmony". You know what I mean

[Siegfried]

This is the article:
http://jingji.cntv.cn/2014/03/28/ARTI1395963853109425.shtml

And it clearly says that the PBOC released a statement saying that the 15 april bank is untrue:对此，央行官方微博当日发布了微博称“‘4月15日前停止一切比特币交易’为失实报道, 人民银行对比特币的态度已在人民银行等五部委《关于防范比特币风险的通知》中明确表述。”

So why all the fuss? Anyone care to illuminate me on this please?!

That statement is the backdrop of the precursor mini-crash.  PBOC stated they did not ban Bitcoin trade, hence the early reports are wrong, but Caixin's latest report says PBOC decided to force close the trade accounts of exchanges - hence this 2nd crash. So the ban is true, but incorrectly described, and now we have the correctly described version. PBOC childishly over-reacted to the incorrectly described internal ban, claiming it is fake, at the rage the ban disclosed to media so early.

Yes.

逾期未关闭的，央行将进行处罚。也就是说，宽限期4月15日之后，比特币网站不再具备给客户提现的合法通道。

If accounts are not closed, the central bank will punish. After April 15, there is no legal way for Bitcoin websites to let users withdraw funds.

[zhangweiwu]

But there must be enough time for traders to get their money back, or that will only lead to "un-harmony". You know what I mean

Ha ha. "You know what I mean" again.

The internal notification was not for the public - I explained this point already. The plan was:

1. Issue this notfications, and let banks notify the exchanges. Bank manager "We ain't gonna work with you, and you know what I mean".
2. The exchanges announces that they can't operate. Putting blame to PBOC is extremely silly move, they should do so by saying "please take our your money back, we can't do business, you know what I mean."
3. People know what it means and cease trading, being aware that exchanges already lined up with PBOC.

Now talk about unharmony, there are so many unharmony things happening everyday! The way to reach harmoney is not to do justice, but to put off the fight, i.e. convert rage to sadness, resent to capitulation. A war can be prevented if both sides knows who wins in the end. Letting exchances announcing they can't do the business is a clear signal that the government had won before the war start.

The plan was good but the notification leaked, two times. The first time PBOC state it was fake, and the second time more details are revealed and Caixin says they confirmed it (though receiver of the notification or PBOC?). This puts PBOC in confronation to bitcoin. This was really unnecessary and un-harmony, not meant to happen, but PBOC won't fear the confrontation, thus the intention will be done.

[Siegfried]

But there must be enough time for traders to get their money back, or that will only lead to "un-harmony". You know what I mean

Ha ha. "You know what I mean" again.

The internal notification was not for the public - I explained this point already. The plan was:

1. Issue this notfications, and let banks notify the exchanges.
2. The exchanges announces that they can't operate. Putting blame to PBOC is extremely silly move, they should do so by saying "please take our your money back, we can't do business, you know what I mean."
3. People know what it means and cease trading.

Now talk about unharmony, there are so much unharmony things. A war can be prevented if both sides knows who wins the war in the end. Letting exchances announcing they can't do the business is a clear signal that the government had won before the war start.

The plan was good but the notification leaked, two times. The first time PBOC state it was fake, and the second time more details are revealed and some staff in PBOC confirmed it. This puts PBOC in confronation to bitcoin. This was really unnecessary and un-harmony, not meant to happen, but PBOC can't back once the confrontation is there, so they still will crash BTC.

So what do you think will happen now? There will still be people in China who want to buy and sell Bitcoin. What will they do?

[windjc]

But there must be enough time for traders to get their money back, or that will only lead to "un-harmony". You know what I mean

Ha ha. "You know what I mean" again.

The internal notification was not for the public - I explained this point already. The plan was:

1. Issue this notfications, and let banks notify the exchanges.
2. The exchanges announces that they can't operate. Putting blame to PBOC is extremely silly move, they should do so by saying "please take our your money back, we can't do business, you know what I mean."
3. People know what it means and cease trading.

Now talk about unharmony, there are so much unharmony things. A war can be prevented if both sides knows who wins the war in the end. Letting exchances announcing they can't do the business is a clear signal that the government had won before the war start.

The plan was good but the notification leaked, two times. The first time PBOC state it was fake, and the second time more details are revealed and some staff in PBOC confirmed it. This puts PBOC in confronation to bitcoin. This was really unnecessary and un-harmony, not meant to happen, but PBOC can't back once the confrontation is there, so they still will crash BTC.

So, in your opinion, why have exchanges continued to operate? Are we to suppose that none of them have a long term business plan? That is hard to believe, especially considering the recent infusion of VC capital into multiple exchanges.

Unless the people running the exchanges are complete idiots, and I assume they are not, what is it that they plan to do?

[evoked22]

Seriously? Like a bunch of girls i swear.

If only they paid so much attention to the billion other real problems they are having. This is an empire that would burn books if it empowered them. Shame

Respect -1

[Neurotraveller]

I don't know why the Chinese central authorities want to cede future financial power to the West by banning Bitcoin. Bitcoin could wind up being worth hundreds of trillions of dollars.  A poor small country like the Phillipines could choose to aggressively adopt it and become an overnight super power in China's backyard. They better think long and hard about their decision. It could be the best or worst decision they make in hundreds of years.

[zhangweiwu]

So, in your opinion, why have exchanges continued to operate? Are we to suppose that none of them have a long term business plan? That is hard to believe, especially considering the recent infusion of VC capital into multiple exchanges.

Unless the people running the exchanges are complete idiots, and I assume they are not, what is it that they plan to do?

This, I cannot solve, but I have a theory.

I am speculating that Exchange's CEOs (some of them know me but didn't establish business contact) are simply confused and waiting for their bank managers to tell them that the accounts will be closed soon, meanwhile making backup plans to move to HK. The bank managers, however, was told to hold, and wait for PBOC's new decision. PBOC is watching media and trying to sense if everybody are ready to accept the fate -> Yes = Go on as planned. No = Make new strategy with the same goal. PBOC has a history of clumsy PR management, they are learning it too, so it's hard to predict their move. Notice that this time PBOC started the action (last time 18th Dec 2013, 5-ministry co-operated) so they have more room to change strategy, nevertheless the intention is clear now.