Bitcoin Price Drops 10% as Chinese Exchanges Stop Bank Deposits

Bitcoin prices crashed today as Chinese businesses began receiving official deposit shutdown notices from banks, confirming recent suspicions of an impending crackdown. Exchanges will stop account recharging via bank accounts between now and 15th April.

Even though the news has been anticipated for over a week now, bitcoin prices sank under $403 from a high of $450.74 on the CoinDesk Bitcoin Price Index after companies began making public announcements on their sites.

Exchange BTCTrade.com made an announcement just before lunchtime in China, followed shortly after by BTC100.org and Huobi. Interestingly, it appears Chinese banks started with smaller exchanges before working up to those with larger trading volumes.

The announcements have all come via the banks themselves, as the PBOC has still not provided exchanges with any official announcement ‘on paper’.

BTCTrade’s statement read:

“With a heavy heart we make this announcement, that BTCTrade just received a telephone call from our bank the Kejicheng (Tech City) branch of China Agricultural Bank Hangzhou, that if we do not stop using our bank account to conduct bitcoin related businesses by 4/15 our account will be frozen. Therefore, we are forced to stop all RMB deposits by 4/15 midnight, although withdrawals will not be affected at [present].”

BTC China CEO Bobby Lee said his company would not be changing any of its banking arrangements until it receives some form of official notice, which hasn’t arrived yet.

“So far, we still have NOT received any official notices from Banks or the PBOC,” he said.

“I have indeed heard that some other exchanges apparently have received notice, but we have not.”

BTC38.com, which specializes in altcoin trading, suspended account funding via bank deposits on 4th April.

At that time, prices of digital currencies other than bitcoin dropped by 20% or more. Hardest hit were megacoin (MEC) and TAGcoin (TAG), which each lost around 50% of their value, while quark fell by 40% and dogecoin around 25%.

Even litecoin, which is traded on most major platforms and is not considered an altcoin per se in China, fell by over 20% in value last week. It is currently trading on BTC-e for just $10.22.

Focus elsewhere

OKCoin and FXBTC also stopped some account funding options after receiving notices from their banks and payment processor partners, but promised to continue trading otherwise after April 15th.

OKCoin CEO Star Xu said, however, that the company was focused more on future expansion plans, and would maintain regular daily operations otherwise.

Said Xu:

“OKCoin’s margin management, risk management, and cash withdraw and coin withdraw functions are working properly at this moment, OKCoin’s English version site will be up quickly, OKCoin will establish overseas offices and move servers there if needed.”

Community unperturbed

In fact, much of China’s bitcoin community shares that spirit and does not seem perturbed by regulatory moves.

“OK is always here, rumor-spreaders can leave now, we already have plans for April 15th,” said OKCoin’s Vice President He Yi.

The industry so far has shown nonchalance in the face of previous government bans, whether implied or actual, since last December, and have developed new ways for customers to move money in and out of exchanges without direct access to bank accounts. These have included a variety of third-party payment processors, pre-paid cards, and a voucher system.

Even BTCTrade’s announcement today ended on a positive note, informing of the company’s intentions to expand overseas in the near future.

“BTCTrade has always set our sites on the global market since coming online, and we have already registered companies in mainland China, Hong Kong, Japan and the US. We are planning to commence USD services soon, and the Japanese version of our website is already online and operational, and a new version will be online before 4/15.”

“Very soon we will publicly reveal our cold wallet address, and utilize 100% proof of reserves, in order to ascertain that the platform does not engage in any transactions, and that user assets are safe, open to public scrutiny.”

CoinDesk will continue to monitor and update this developing story.