Following inspections from People’s Bank of China, the Big Three Chinese exchanges have halted margin and zero-fee cryptocurrency trading.
The End of the Beginning?
Bitcoin’s surge in price at the beginning of 2017 caught the attention of the Chinese government, which has been fighting tooth and nails against capital flight in the country, restricting foreign investments and gold importations. Given that an overwhelming majority of the Bitcoin trading volume comes from China, the government has now turned its eye towards the cryptocurrency industry.
The warnings and subsequent inspections that were carried out on Bitcoin exchanges in the country have had a tremendous impact on Bitcoin price, which dropped by about 30% in the days that followed.
But now as Bitcoin exchanges in China are working with the PBoC, traders and investors are regaining confidence both in Bitcoin and in the Big Three exchanges: Okcoin, Huobi, and BTCC. This is perhaps why the BTC price experienced only a minor drop today and is managing to stay above the $900 range.
News information service specializing in these Chinese Bitcoin market @cnLedger tweeted:
— cnLedger (@cnLedger) January 22, 2017
However, it is not yet clear whether the exchanges complied with a direct request from the PBoC, or whether under their own initiative.
Margin Trading & Zero-Fees Gone
Although no regulatory framework has been issued with regards to the standards that exchanges must comply to in order to stay legal, these have been communicating with the PBoC in order to find a new foundation for Bitcoin trading within the country.
It is not clear if Bitcoin margin trading will be allowed in after the new regulations are issued, but for now, all three exchanges have halted margin loan services. Since then, trading volume in the country has decreased immensely.
Trading fees have also been implemented by all three exchanges, who now charge a 0.2% fee for every trade performed on the platform. It is unclear if these measures have been taken in order to comply with the requests of the PBoC or if exchanges are simply trying to boost earnings following the halt on margin trading. According to BTCC, the move is an effort to curb volatility and market manipulation.
3/ We are implementing fee-based trading to curb market manipulation and extreme volatility.
— BTCC (@YourBTCC) January 22, 2017
Zero-Fees Arrive in the UK
Interestingly, the UK-based exchange Coinfloor has recently moved in the opposite direction, by removing all trading fees from its platform. As China went West, the UK went east! Although only one exchange has applied this new policy, more exchanges may follow suit, as this may give Coinfloor significant competitive advantage among global exchanges.
Although the inspections announced and carried out by the People’s Bank of China have led to a crash in the price of Bitcoin, the new developments seem to have soothed the market, which has pared much of the losses today.
The fact that exchanges in China are working closely with the PBoC seems to be a positive sign for Bitcoin, which is becoming an increasingly important part of the economy and throughout the world.
China’s “control” over the market has also been reduced, given that margin trading is no longer in effect. This means that the global market is now less dependent on events in China. The halt in margin trading also helps the price remain stable by avoiding large panic sells that stem from the leverage borrowed by traders.
Will more countries begin to offer zero-fee trading? Share your thoughts below!
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