File photo: VCG
Uncertainty has increased in China’s virtual currency trading in recent days, with some platforms suspending or raising the threshold for trading certain types of virtual coins.
Much of the activity has revolved around Initial Coin Offerings (ICOs). On Saturday, Shanghai-based virtual currency trading platform btcchina.com announced it would halt the prepaid and transaction services for ICO business starting from Saturday, according to the platform’s website.
A customer service representative for btcchina.com told the Global Times on Sunday that it’s uncertain whether btcchina.com will resume ICO trading in the future. “The website will release an announcement [if it is to be resumed],” the representative said.
ICOs in the spotlight
An ICO is a fundraising method that trades future crypto coins for virtual currencies that have an immediate, liquid value such as Bitcoin.
Domestic virtual currency service provider ico.info on Wednesday also announced it would suspend all ICO business and that it would “wait for relevant government departments to clarify policies.” Ico.info noted in a statement that it would carry out business in accordance with the regulations after they are implemented. Ico.info couldn’t be reached for comment as of press time.
A senior Internet finance analyst surnamed Guo, who refused to disclose his full name, said that the nature of the ICO business is hotly debated.
“The process of ICO trading is a bit like illegal fundraising, and the applications of the future crypto coins are not clear enough. That’s why some platforms have decided to halt ICO trading,” Guo told the Global Times on Sunday.
But he said there are also downsides to suppressing it as an investment model. “Some virtual currencies, like Ethereum, couldn’t flourish without the help of ICOs,” he told the Global Times.
Currently, ICO trading remains operational on several domestic platforms like bter.com and btc9.com.
On bter.com, an ICO coin was valued at 2.79 yuan ($0.43) as of 5:45 pm Beijing Time on Sunday.
Regulations to come
Zhu Jiawei, COO of huobi.com, told the Global Times on Sunday that the website has stopped leveraging business on its platform, and speculative needs have been curbed to a certain extent.
“The trading volume for Bitcoin is about 10,000 each day on our platform, showing a stable trend,” he noted, adding that huobi.com does not provide ICO trading services.
Btcchina.com issued a statement in February 2017 saying that it would take forceful measures such as restricting trading and freezing assets if it discovers suspicious trading activities.
The websites’ tightened management comes as virtual currency trading is on the rise in China. The Global Times observed that on jubi.com, a virtual currency trading platform, there are more than 40 types of virtual currencies that can be exchanged for yuan, including Bitcoin, litecoin and antcoin.
According to Guo, China’s financial technologies have been developing rapidly in recent years. Besides, many domestic investors can’t find a good investment channel for their idle assets, and that’s why they have turned their eyes to virtual currency trading.
But he warned that bubbles are accumulating in this area. “So far there’s not a channel for the identity of virtual currency investors to be verified, so speculators gather on virtual currency trading platforms,” Guo noted.
He also said that the government has not yet launched clear regulations and laws for virtual currency trading, even though it has shown its intention to support relevant technologies, such as establishing a research center for digital assets. “I think it won’t be long before new regulations are coming out,” he said.
“Virtual currency investment can turn into mass fraud, as with peer-to-peer transactions in the country, with much worse consequences as it is all done online,” Li Yi, a senior research fellow at the Internet Research Center under the Shanghai Academy of Social Sciences, told the Global Times on Sunday.
According to Li, the government should launch measures to restrict virtual currency investment soon. “They should not only warn the public of potential risks in the investment, but also raise the market threshold for virtual currency issuers,” he noted.
Newspaper headline: Virtual currency crackdown