China Tightens Exchange Controls, Sends Bitcoin Tumbling Down
China continues its offensive against Bitcoin, sending the value of the cryptocurrency to the bottom. Bitcoin faced further erosion of 10 percent in its value as China's central bank announced that it may investigate unauthorized financing and market manipulation.
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Bitcoin saw a massive surge in its value as it gained over 125 percent in 2016. In contrast, the value of yuan declined by nearly 7 percent during the same time period. It is widely believed that Bitcoin may be used for transferring money outside of China, bypassing the regulations imposed on such transactions in the country.
The People's Bank of China announced on Wednesday that it will carry out site inspections on Jan. 17. The investigation will focus on checking the proper licensing of the enterprises carrying out trading and determining if appropriate anti-money laundering systems have been implemented.
The investigation is expected to cover various Bitcoin exchanges including OKCoin, Huobi, and BTCC. It is reported that the PBOC officials in Beijing visited Huobi and OKCoin offices on Wednesday. The bank released a statement saying that "spot checks were focused on how the exchanges implement policies including forex management and anti-money laundering."
Similarly, the PBOC officials in Shanghai visited BTCC to check for fund security risk, unauthorized financing, and market manipulation.
The Bitcoin market plummeted following the announcement. The value of the currency tumbled to nearly $785 before recovering. Currently, Bitcoin is valued closed to $805 mark. The Bitcoin trading is dominated by Chinese investors, causing alarm among the regulators.