Jiang Zhuoer: Talk about the recent turmoil in China's cryptocurrency exchanges

1. Considering the recent situation of OK and Huobi, especially the blocking of .me domain names without circumvention of firewalls of the three major exchanges (this is a very obvious statement) , I believe that in the face of record high coin prices and the upcoming bull market, regulators are cooling down China's cryptocurrency trading market and reducing the number of Chinese market participants .

2. On December 5, 2013, the People's Bank of China and five other ministries and commissions issued a notice on preventing Bitcoin risks, requiring financial and payment institutions not to participate in Bitcoin . However, the notice also pointed out that " Bitcoin transactions are a commodity trading behavior on the Internet, and ordinary people have the freedom to participate under the premise of assuming their own risks ."

3. Therefore, the regulatory attitude towards Bitcoin has always been very clear: first of all, it is open-minded enough not to completely ban Bitcoin for reasons such as disrupting the financial order , but at the same time it requires reducing Bitcoin transactions in China and does not want Bitcoin to have an impact on the existing financial, trading and foreign exchange markets . Even if it is difficult to completely ban Bitcoin transactions due to the decentralized nature of Bitcoin, the market size must be reduced.

Supervision is particularly required to avoid fanatical short-term cryptocurrency speculation involving a large number of ordinary people. Due to the huge volatility of Bitcoin and the prevalence of futures leverage, the result of short-term cryptocurrency speculation by ordinary people is basically a complete loss of all their money, or even heavy debt, which affects social stability .

4. There is no need to worry about regulatory risks for assets in OKCoin . In the last round of bull market, the first cooling measure adopted by the exchange was to prohibit the withdrawal of coins, but at the same time, the supervision paid great attention to maintaining social stability. For example, after the RMB exchange was closed in 94, proper arrangements were made for the exchange's aftermath and user asset withdrawals . You can review the announcement at that time, "OKCoin's Announcement on the Suspension of RMB Trading Business". Even in the face of ICOs that are clearly suspected of illegal fundraising/illegal issuance of securities, the supervision first requires investors to return coins, rather than arresting them .

5. However, it is difficult to predict how long the OK will take. Given that there are many newcomers who do not understand the history, let’s review the regulatory process in 2017:

On January 6, 2017, the price of the currency was ¥6291. "Foreign media misreported the "Bitcoin ban", and the price of Bitcoin was sniped."

The People's Bank of China summoned the heads of three major Bitcoin exchanges in Beijing and Shanghai, requiring the exchanges not to engage in volume manipulation and offline promotion activities. At the same time, it reminded users to view virtual currencies correctly, invest rationally and bear their own risks.

On January 11, 2017, the price of the currency was ¥5674. "Following the talks last week, the central bank conducted on-site inspections of the three major Bitcoin exchanges in Beijing and Shanghai."

The People's Bank of China entered the three major exchanges to conduct on-site inspections, causing Bitcoin to plummet by 15%

On January 22, 2017, the price of the coin was ¥6247. The era of "zero handling fees" will become history! The three major exchanges simultaneously released an announcement on charging transaction fees.

The three major exchanges have stopped financing and lending, and will once again levy service fees, which will be the beginning of this round of overall adjustments in the industry.

At present, the effects of the central bank's rectification are beginning to show, and the market will gradually return to rationality in the future. The implementation of transaction fees on trading platforms is expected to further promote the market to mature.

On January 25, 2017, the price of the currency was ¥6194. "Central Bank: On-site inspections of Bitcoin trading platforms will continue."

As the inspection progresses, the three major trading platforms have stopped providing financing and currency services, and some financial services have also been suspended. At the same time, most domestic exchanges have implemented a two-way 0.2% handling fee mechanism at noon yesterday. Bitcoin trading volume has shrunk by 90% compared to before the rectification.

On February 9, 2017, the price of the currency was ¥6749. "The People's Bank of China Business Management Department continues to interview Bitcoin trading platforms in Beijing"

Many exchanges announced the closure of Bitcoin withdrawals . Huobi.com issued an announcement on the evening of the 9th, saying that it would fully upgrade its anti-money laundering system to effectively combat money laundering, currency exchange and pyramid schemes. And from the time of the announcement, Bitcoin withdrawals were suspended, while RMB withdrawals were not affected.

On February 13, 2017, the price of the currency was ¥6826. "Japan becomes the largest Bitcoin trading market"

Previously, several major Bitcoin exchanges in China had implemented a no-transaction-fee strategy. Coupled with the use of leverage, Bitcoin trading volume in the Chinese market even accounted for more than 90% of the global Bitcoin trading market. The several major regulations introduced by the central bank have undoubtedly dealt a heavy blow to China's Bitcoin trading market. Interestingly, the price of Bitcoin has not suffered a heavy blow due to the plunge in trading volume, which further confirms Bitcoin's resistance.

On June 1, 2017, the price of the coin was ¥16505. "OKCoin opens withdrawals for Bitcoin and Litecoin! The daily limit for each person is 20 BTC."

OKCoin has opened Bitcoin and Litecoin withdrawals and set a daily withdrawal limit for each person . This is the first time that the three major trading platforms have opened Bitcoin and Litecoin withdrawals since the central bank carried out a systematic rectification of digital currency trading platforms in January this year. OKCoin Bitcoin prices rose 8% in response, reaching a maximum of 16,500 yuan.

On September 4, 2017, the coin price was ¥29549. "The ICO regulatory storm is coming: various regions are urgently investigating ICO platforms and Beijing provides a list"

Recently, the National Internet Finance Risk Regulation Office (NSFO) issued the "Notice on the Cleanup and Rectification of Token Issuance and Financing", in which the NSFO initially provided a reference list of ICO platforms. The provinces will "implement measures such as interviews and monitoring of senior executives of token issuance platforms and their accounts to protect the interests of investors" based on this list. The relevant departments of a certain province issued it in an "urgent" manner, and even required it to be submitted to the Provincial Regulation Office before noon today.

On September 9, 2017, the price of the currency was ¥27022. "A regulatory storm is coming, and trading platforms are facing being banned? Where will Bitcoin trading go?"

"The regulatory authorities have decided to close virtual currency exchanges in China, which involves all virtual currency and legal currency exchanges represented by OKcoin, Huobi.com and Bitcoin China. Caixin reporters confirmed this news from people close to the Internet Financial Risk Special Rectification Leading Group, and learned that the resolution has been deployed to local areas."

On December 11, 2017, the price of the currency was ¥113172. "CBOE was squeezed after the official launch of Bitcoin futures, and BTC rose accordingly."

After the Chicago Board Options Exchange (CBOE) officially launched Bitcoin futures contracts yesterday, the website was temporarily down due to excessive traffic.

On December 17, 2017, the price of the currency was ¥129,105 (the highest in Bitcoin's history) " Bitcoin is in a bubble driven by speculation and greed, making it impossible for Bitcoin to operate as designed "

“As a result, the increase in congestion on the Bitcoin network means that Bitcoin is not currently functioning as it was originally designed,” Antonopoulos warned.

Asher Tan, CEO of Australian bitcoin exchange Coinjar, elaborated: “The bitcoin blockchain is completely clogged and the fees are ridiculously high.”

6. Looking back on this period of history, we know that regulation cannot change the course of history. Why did the exchange stop withdrawals when the price was ¥6,000, but resume withdrawals when the price was ¥16,000 four months later? There is a saying that it was because the exchange told the regulator: "Look, the rise in the price of the currency is really not the result of our hype or offline promotion. Bitcoin is a global market. We stopped withdrawals, but the price continued to rise. It makes no sense to continue not allowing withdrawals ." Therefore, the regulator allowed the exchange to resume withdrawals, but also decided to close the RMB exchange when the price continued to rise, the market was impetuous, and ICO chaos was rampant.

But the regulation achieved its main purpose, significantly reducing China’s participation in the cryptocurrency market and preventing Bitcoin from affecting its financial and payment systems .

You promised me to colonize Mars, and in exchange I got Facebook
——Buzz Aldrin, the second person to walk on the moon, complained

7. A large number of cards in the foreign trade circle have been frozen. Jack Ma was interviewed by the People's Bank of China, the China Banking and Insurance Regulatory Commission, the State Administration of Foreign Exchange, and the China Securities Regulatory Commission today. I believe everyone knows this. I will not say much about the international economic and political situation on a larger scale. In the face of basic science that has stagnated since World War II, we have eaten up the dividends of scientific and technological development, and in the past 20 years, we have eaten up the dividends of efficiency optimization through the Internet. The world has entered the stock mode from the incremental mode, and entered the chaotic era from the constant era. Most of the problems we are facing now, from 996 to the inability to withdraw money, are essentially caused by the same reason.

It is important for everyone to examine the robustness (ability to survive unusual and dangerous situations) of their finances and assets .

Not your key, Not your Bitcoin

Not your key, Not your Bitcoin

Not your key, Not your Bitcoin

Important things should be said three times

Risk warning : The content of this article is only the author’s personal opinion, does not represent the views or position of Zhikuang University, and does not constitute any investment opinion or recommendation.