Chinese bitcoin exchanges put an end to loan-based trading

Chinese bitcoin exchanges put an end to loan-based trading

The central bank’s crackdown on bitcoin exchanges has forced two of the leading digital currency platforms in China to overhaul their service offerings.

OKCoin and Huobi announced that they are halting margin trading, per the requirements of the People’s Bank of China (PBoC). On its website, Chinese language OKCoin said it is stopping margin trading services “immediately.”

Chinese bitcoin exchanges put an end to loan-based trading“There will be no new margin trading transactions. Users [with] loans that have already taken place will not be forcibly asked to repay the debt. Users will no longer be able to apply for new loans after voluntarily repaying previous loans,” OKCoin stated.

Huobi issued a similar statement on its Weibo account on Thursday, while BTC China announced that the suspension of its margin loan trading feature last January 12.

Investigators from the central bank said they discovered “irregularities” in the operations of major bitcoin exchanges in the country, singling out BTC China, Huobi and OKCoin. According to the PBoC, BTC China offered loans, which is beyond the scope of its business as a bitcoin exchange.

The three bitcoin exchanges were found to offer a loan feature called margin trade, which the PBoC said not only violates the country’s rules but has also caused bitcoin’s recent volatility. Additionally, the investigators discovered that the exchanges do not have a third party depository of investors’ funds or have they established sufficient anti-money laundering measures.

The three bitcoin exchanges have been caught in the middle of the Chinese central bank’s recent crackdown on virtual money. Several weeks ago, PBoC officials conducted on-site visits at BTC China, OKCoin and Huobi to check whether the exchanges’ operations have gone beyond the scope of their market.

Current bitcoin price

Meanwhile, the price of bitcoin passed the $900 mark Thursday night, although the price dropped again to a low $890 early Friday morning.