Following the warning issued by China’s central bank to domestic exchanges earlier today, two out of three of China’s most widely used bitcoin exchanges have announced that they will suspend bitcoin and litecoin withdrawals for one month effective immediately.
The move to suspend any bitcoin and litecoin withdrawals appears to be a direct consequence of the closed-door meetings between the PBOC and bitcoin exchanges that happened yesterday and the warning issued earlier today.
Huobi and OKCoin just publicly announced in identical statements that the decision was taken to intercept any “illegal transactions” and fortify their anti-money laundering (AML) efforts. They informed the users that in a bid to ensure their compliance with local financial and money transmission regulations, they were being asked to upgrade their Anti-Money Laundering systems.
The decision to disable withdrawals was abrupt and no warning or notification was issued to the users.
Huobi and OKCoin jointly control approximately 25% of the global Bitcoin exchange market and are two of the largest bitcoin exchanges in China. On a daily basis, the two exchanges process litecoin and bitcoin almost worth 55 million dollars.
As a result, the bitcoin trade in China immediately plunged by 7% and in what is the third major price crash inspired by the PBOC; Bitcoin price nosedived back to below $1000.
The decision is to only prohibit only bitcoin and litecoin withdrawals, and will not have any influence on other services like Yuan recharge, withdrawals etc according to the exchanges.
Both Huobi and OKCoin were earlier criticized by the PBOC for flouting the local regulations by operating cryptocurrency businesses on top of an AML system.
The failure by the two exchanges to address the AML system issue during the preliminary inspection and visits by the PBOC has caused the PBOC to force the two exchanges to temporarily disable withdrawals and operations until the bolstering of the AML is undertaken.
There has been no update from BTCC, the third exchange comprising the ‘Big Three’ domestic exchanges in China.