Chinese Regulation of Cryptocurrency

Some ominous rumblings regarding the extent of planned Chinese regulation of the crypto market:

Chinese media is reporting executives of crypto exchanges have been ordered to not leave the country with a very rough translation stating:

“A number of informed sources say the executives of special currency trading platforms are not allowed to leave Beijing to cooperate with the investigation. In accordance with regulatory requirements, trading platform shareholders, the actual controller, executives and financial executives need to fully cooperate with the relevant work in the clean-up period in Beijing.”

. . . .

China, therefore, appears to have isolated themselves, while the rest of the world seemingly moves on, but questions are being raised regarding miners, with some 80% of their operations centralized in the country.

An investor in Chinese bitcoin mines told AFP: “All of us didn’t believe they would shut down the exchanges so we are preparing for the worst.”

China’s decision to shut down exchanges took many by surprise and was very unexpected with the authoritarian government giving no hint they plan to take such draconian measures.

Questions therefore are being raised on whether they might do so for miners, a $2 billion importing industry which may find it difficult to operate without the ability to sell their bitcoins on the market.

That is especially so because WSJ is suggesting the ban is a total ban, with apparent plans to declare even Off the Counter (OTC) trading as illegal.

In which case, it would be as good as impossible for Chinese miners to operate as they would be unable to cover their considerable expenses without the ability to exchange their coins for fiat currencies.

Which is why many expected OTC trading to be allowed, with Chinese media so reporting initially, but it’s not clear whether they have changed their mind.

As such, miners are seemingly preparing for the worst, with some thinking of relocating to neighboring countries or to very cold areas, such as Iceland.

http://www.trustnodes.com/2017/09/19/china-bans-bitcoin-executives-leaving-country-miners-preparing-worst

The quality of sourcing here is unclear, but this suggests a much more widespread crackdown than originally reported.

Author: Michael O'Connor

Michael O'Connor is an attorney in Quinn Emanuel's Washington, DC office. Prior to joining the firm, Michael clerked for the Hon. D. Brooks Smith of the U.S. Court of Appeals for the Third Circuit and worked for several years at another major international law firm. He has dual degrees in Computer Science and Biology from Penn State University. Michael's practice includes intellectual property litigation, antitrust litigation, and data security and privacy. Michael advises clients on legal planning for data breaches, their obligations for safe handling of personally identifiable information, and the legal implications from emerging technologies like Bitcoin, Ethereum, and the blockchain. He has applied his technical training to patent cases involving semiconductor design, systems programming, and mobile device architecture. He has worked on multiple cases at the intersection of patent and antitrust law. Michael represents clients in cases before federal courts throughout the country, as well as before the International Trade Commission.