September 13, 2017
The Chinese government, increasingly uneasy about virtual currency, is on the verge of shutting down the country’s Bitcoin exchanges, say sources. The move comes as the government focuses on preventing capital from leaving to digital currencies. But if China, the world’s No. 2 economy, does indeed take this step, the market for cryptocurrencies, including all the new companies using it, will feel the impact. Of all the virtual currencies, Bitcoin is the largest, since restrictions on it were loosened in Japan and elsewhere.
The Wall Street Journal notes that, “advancements in buying and selling” are also responsible for the uptick in Bitcoin. CoinDesk reports that, after the ban was reported by Chinese news, Bitcoin dipped 10 percent to $4,186, from above $4,600 days earlier. China, a “major hub for Bitcoin,” where “more than 80 percent of global Bitcoin activity took place in yuan,” is also a center for the creation of the algorithms that mine Bitcoin.
According to sources, “China’s central bank together with other regulators has drafted instructions banning Chinese platforms from providing virtual-currency trading services.”
Up until now, China has “allowed Bitcoin exchanges, such as BTCC, Huobi and OKCoin, to operate within the mainland for years,” but the new ban is seen as “part of a broader effort to root out risks to the country’s financial system.” What’s not clear is when the ban will go into effect.
Earlier this year, regulators “told at least one of the exchanges that the decision to shutter them has been made,” while another “said the order may take several months to implement.” Analysts say that virtual-currency activity is “moving off exchanges” to private trading.
Bloomberg reports that North Korea is “stepping up efforts to secure Bitcoin and other cryptocurrencies” to get around new United National Security Council trade restrictions. Security researcher FireEye confirmed that North Korean hackers have launched three attacks on South Korean exchanges (one of which was successful), and also “breached an English-language Bitcoin news website, and collected bitcoin ransom payments from global victims of the malware WannaCry.”
“We definitely see sanctions being a big lever driving this sort of activity,” said FireEye researcher Luke McNamara. “They probably see it as a very low-cost solution to bring in hard cash.” The targeted South Korean exchange, Yapizon, lost more than 3,800 Bitcoins, valued at $14 million at current rates.
The International Cyber Policy Centre at the Australian Strategic Policy Institute says that North Korea’s Reconnaissance General Bureau, which handles cyber operations is staffed by “an estimated 6,000 officers.” South Korea is a handy target, not just because of proximity and language, “but because the country has become one of the busiest trading hubs for cryptocurrencies this year.”