BITCOIN

New rules require China’s bitcoin exchanges to verify customer identity

TAGs: Bitcoin, China, PBOC

Bitcoin exchanges in China may soon be required to identify their clients.

The People’s Bank of China (PBoC) recently circulated new guidelines, which would subject domestic bitcoin exchanges to current banking and anti-money laundering laws. In addition, the exchanges would also be required to collect information to identify their clients, The Wall Street Journal reported, quoting people familiar with the matter.

New rules require China’s bitcoin exchanges to verify customer identityIf enacted, the rules would require exchanges to install systems that will collect customer information and report suspicious trading activities to authorities. The PBoC will be in charge of handling any violation, according to the report.

The new guidelines is the latest action taken by the Chinese central bank as it cracks down on the country’s digital currency sector.

Zhou Xuedong, director of PBoC’s Business Administration division, recently said authorities need to explore “long-term regulatory mechanisms” and licensing requirements for all digital currency exchanges at the national level. Zhou also called for the creation of blacklists against exchanges that do not follow PBoC’s directives.

The central bank’s close scrutiny on cryptocurrency operations has already claimed many casualties, including the so-called “Big 3” exchanges—Huobi, OKCoin and BTCC—which halted bitcoin and litecoin withdrawals while they undergo an upgrade to fight “money laundering, exchange, pyramid schemes and other illegal activities.”

Several weeks ago, the three bitcoin exchange operators started charging 0.2 percent trading fees per transaction to all their users after PBoC officials said they discovered the three were offering a loan feature, which the central bank said not only violates the country’s rules but also caused bitcoin’s volatility.

Smaller digital currency operators were also forced to make several changes in their operations. Shenzhen-based bitcoin marketplace BitKan stopped new registrations and suspended over-the-counter trades while the company upgraded its anti-money laundering checks. Bitcoin mining company HaoBTC also announced that it is closing its exchange operation “given the fact that the prospect of a regulatory policy for a bitcoin exchange isn’t clear yet.”

The PBoC had already warned Chinese digital currency exchanges to enforce anti-money laundering and foreign exchange regulations.

Current bitcoin price

The price of bitcoin dropped to $1,077.38 during early Friday morning’s trading.

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