Barely a few days before the expected resumption of withdrawals by the big Chinese exchanges, a statement by OKCoin indicated an imminent extension of the suspension. In a statement to users on Wednesday, OKCoin said: “Once the regulatory authorities have given their approval, you may withdraw currency.”
A lot of Bitcoin users now think that the decision concerning the resumption of withdrawals is dependent upon the timing and decision of the PBoC.
Contrary to this assumption, active participants in the Chinese Bitcoin community, as well as BitLox Director Dana Coe, tell Cointelegraph that the present “suspension” may have been misunderstood by a lot of people as most users in China have carried on with their normal businesses.
Coe says:
“I don’t really see a huge disruption for the majority of the users. The selling of Bitcoins and withdrawal of RMB is not impeded at all.”
According to Coe, most Chinese participants in the Bitcoin community are interested in Bitcoin for its value in trading and arbitrage. Most users of the Chinese exchanges deposit RMB so that they may purchase Bitcoins and take advantage of market movements, as any gains are normally converted back to RMB or held on the exchange as Bitcoins.
However, Coe notes that even though it may be an inconvenience for users to not take their profits in Bitcoins, it is only appropriate to wait and see what sort of a plan the Chinese regulators and exchanges will come up with:
“It appears they are negotiating for a plan, but it is difficult to say what such a plan will look like as the motives of the regulators is somewhat unclear.”
Chinese regulation is good for Bitcoin
Coe continues by telling Cointelegraph of his suspicion that regulators in China may want to reduce overleveraging and what they call “excess” speculation.
The rationale behind this is that they do not want to be blamed and/or asked to reimburse losses from risky trades or system failures. Regulators want a reduction of such “horror stories” where people lose their shirts from 20x leveraging or not being able to get onto a website so as to sell in a stop-loss capacity. This development in Coe’s opinion is, in the long run, a good thing for Bitcoin in China as stories about sensational losses always scare people.
Another aspect that Coe observes is the regulation of exchanges in that they must have transparent volume reporting. This he says is healthy for the whole Bitcoin system, as a more accurate picture can be drawn of volumes and transactions.
Coe concludes by saying:
“When the exchanges resume withdrawals of Bitcoin, I expect it will be heavily encumbered with some sort of a quota or reporting system, as China has rather strict controls on the amount of currency that may be taken out of the country. But as noted, on the whole, I do not believe this will actually have a great effect on the market or exchanges. The market and Bitcoin community as a whole will probably breathe a sigh of relief and rally once the decisions come out, whatever they are. Markets hate uncertainty.”