Bitcoin Tracker: All Eyes On China

After a couple weeks without major movement, investors and acquirers are showing interest in bitcoin. First, CoinDesk acquired San Francisco-based bitcoin and blockchain investing news and market data startup Lawnmower for an undisclosed amount.

Secondly, Kenyan payments platform startup BitPesa, which allows individuals and businesses to make payments in multiple currencies, including digital, to and from sub-Saharan Africa, received funding. The startup nabbed $2.5 million in venture funding for its Series A from Colle Capital Partners, Blockchain Capital, Pantera Capital, Digital Currency Group and Draper Associates. The latest round brings BitPesa’s total funding to $4.25 million.

In U.S. trading news, the deadline is fast approaching for the SEC decision to approve or deny the Winklevoss twins’ bid for a bitcoin trust. Three-and-a-half years ago, the two filed with the SEC to approve a bitcoin ETF, named the Winklevoss Bitcoin Trust (COIN).

Since then, the proposal has been updated numerous times. The SEC has reportedly asked for public comments and repeatedly put off making a decision. But now, the SEC has run out of deadline extensions and will make a call one way or another by March 11 of this year. Analysts are mixed on the likelihood of this prospect.

The major crypto story this week again comes from East Asia. Some major changes are currently underway in China, and they’re already impacting bitcoin’s trading value. (In case anyone was still questioning the inexorable link between bitcoin’s success and China regulator sentiment, see below.)

The price of bitcoin is back below $1,000, falling from a recent high of over $1,077 down to below $950 in just under two hours on Thursday (Feb. 9) morning.

The price had recovered to around $975.20 at the time of writing but was still trending downward as the news spread of China expanding its domestic bitcoin exchange probe and how it would affect bitcoin exchanges from here on out.

Last month, the People’s Bank of China (PBoC) launched a probe into major bitcoin exchanges in Beijing and Shanghai, including BTCC, Huobi and OKCoin, investigating possible instances of market manipulation, money laundering and unauthorized financing.

The PBoC met with nine more small bitcoin platforms on Wednesday afternoon, asking a wide variety of questions, including some that were reportedly related to anti-money laundering. Current Chinese regulations limit foreign exchange to $50,000 each year, but some believe that people are using bitcoin and other digital currencies to circumvent this maximum.

In response to the probe, the major Chinese bitcoin exchanges first restricted margin trading and introduced trading fees. BTCC, Huobi and OKCoin all started charging traders a flat fee of 0.2 percent per transaction.

Two of China’s largest bitcoin exchanges — OKCoin and Huobi — recently announced moves to temporarily suspend bitcoin withdrawal capabilities for the next month. Both exchanges separately announced that their teams would be working on platform updates to improve their abilities to combat money laundering and prevent illegal transactions.

BTCC, the nation’s largest exchange, also announced it would be performing upgrades, said CoinDesk. In this case, withdrawal capabilities won’t be completely suspended. Rather, bitcoin and litecoin withdrawals will take 72 hours to process.

In response to the meeting on Wednesday with the PBoC, a number of smaller Chinese bitcoin exchanges also announced that they would begin imposing or increasing trading fees, including BTC Trade, BTC100, CHBTC, Dahonghuo, Yuanbao and BitBays.

For now, the PBoC seems to be playing somewhat nice as long as Chinese exchanges stay in line. While the era of fee-free bitcoin trading in China seems to be over, there has been no indication of a major push on the regulatory to ban or criminalize cryptocurrency outright. Not for now, at least.

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. One thing seems certain in all this — if bitcoin ever goes down in China, it might just go down for good.

But even if that were the case, it seems likely that another digital currency (or currencies) would swoop in to fill the crypto-vacuum. The world certainly isn’t short on different types cryptocurrencies.

For example, there’s soon to be another new player on the scene. Musician Tatiana Moroz’s new cryptocurrency, called Tatianacoin, has just been released in beta. Owners of Tatianacoin will reportedly be able to stream her music, chat directly with her and other fans, as well as access unique multimedia content, VIP experiences, recording studio sessions, private concerts and personalized fan gear via blockchain technology.

The goal is to try to solve the problems faced by artists in income potential, media distribution and fan relations within the contemporary music industry.

Tatiana Moroz said in a press release: “After experiencing firsthand the troubles artists face trying to make a name for themselves, I sought a revolutionary way for artists and fans to help each other through incentivized financial support and social connectivity. The only way to achieve this is through the power of the blockchain: a technology that presents countless opportunities for artists and musicians.”

Interesting in its own right as a crypto-marketing tactic and a method to raise awareness of issues facing today’s upstart musicians, it seems unlikely Tatianacoin will progress to become something more utilized in the world of digital currency. But you never know for sure. It will all depend on whether users buy in.


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.

Click to comment