China Causes Confusion on Cryptocurrencies

China Causes Confusion on Cryptocurrencies

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Cryptocurrencies have been very reactive to reports and rulings handed down from Chinese financial authorities over the past few weeks. It started when China banned ICOs or initial coin offerings earlier this month, citing cryptocurrencies as an easy means to money launder or conduct financial schemes. Before the news, major player Bitcoin was almost at $5000 per coin and has since tumbled back down to the low $4000s over two weeks.

Back in July, the SEC had announced warnings from an investigative report it conducted on one particular ICO known as "The DAO", but hasn't made any definitive rulings to ICOs or the virtual coin market. 

"The innovative technology behind these virtual transactions does not exempt securities offerings and trading platforms from the regulatory framework designed to protect investors and the integrity of the markets.", stated Stephanie Avakian, Co-Director of the SEC's Enforcement Divison. 

This week, reports have been swirling around whether China was going to ban cryptocurrencies flat-out in an attempt to mitigate financial risks. Bloomberg is reporting from sources that China will ban virtual currencies from being traded on domestic exchanges, but not in the OTC (over-the-counter) markets. China accounts for around 23% of all bitcoin trading so this would be a somewhat substantial blow to the growth of the virtual coin market. 

Cryptocurrency and blockchain expert CoinDesk says not to worry about the current rulings since China has been researching blockchain-based currencies for a while now, "The most likely scenario is that the prohibition is akin to hitting the 'pause' button. This should give the market time to settle down and the regulators a window in which to get consumer protections in place." the report reads. 

And settle down it has. At the time of publishing, Bitcoin was priced at $4276.87, up 1.64% with other major player Ethereum up 1.77% to $299.34. Now, we wait for China's official ruling. 

 

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