Chinese Bitcoin Rules Would Require Identify Verification

China’s central bank is expected to proceed with new bitcoin regulation that will require exchanges to identify clients and follow banking guidelines.

MarketWatch reported that the increased scrutiny from the central bank has led many bitcoin exchanges to suspend withdrawals from their platforms and impose trading fees. As a result, Chinese investors have pulled back from the market.

According to a draft version of the proposed guidelines, Chinese bitcoin exchanges would be held to the same banking and anti-money laundering laws as financial institutions. They would also be required to collect identifiable information from their customers and deploy systems to collect and report suspicious activities, people familiar with the matter stated.

Any violations by the exchanges would then be handled by the People’s Bank of China.

Last month, the bank met with nine small bitcoin platforms, said The Wall Street Journal, and asked them a wide variety of questions, including some that were reportedly related to anti-money laundering.

Bobby Lee, CEO of Shanghai-based bitcoin exchange BTCC, was quoted by WSJ as saying: “It’s an open secret that the PBoC is not happy to see bitcoin prices go up. With the recent rise, they’re taking actions to see the price go down.”

Chinese bitcoin exchanges account for over 90 percent of worldwide trading, and over 80 percent of bitcoin mining operations are currently stationed in the nation of some 1.3 billion.

A shift in Chinese demand or a sudden increase in investor concern has been shown to have a dramatic effect on the value of the popular digital currency. The future of bitcoin in China is uncertain as of now as the PBoC continues its investigation. But one thing is for certain: If bitcoin goes down in China, it’s more than likely to go down for good.

According to data tracker Bitcoinity, yuan-denominated bitcoin trades accounted for just 17 percent of global volume over the last month, down from 97 percent in the past six months.