The weekly trading volume of LocalBitcoins China is on the rise again amid the People’s Bank of China’s meetings with Bitcoin exchanges on strengthening regulations surrounding Bitcoin trading. Meanwhile, the Bitcoin price has dropped again by around four percent overnight, according to CoinMarketCap.
Last week, the PBoC announced a series of meetings to be held this week with local Bitcoin exchanges. Officials and regulators from the PBoC planned to discuss current regulations and policies surrounding Bitcoin trading and the regulatory framework for Bitcoin exchanges moving forward.
So far, discussions between the PBoC and local Bitcoin exchanges including OKCoin, Huobi and BTCC have been optimistic, mostly because OKCoin and Huobi, the two Bitcoin exchanges flagged by the PBoC for having incomplete Know Your Customer (KYC) and Anti-Money Laundering (AML) systems, announced that they will enable Bitcoin withdrawals soon.
However, users of OKCoin and Huobi were requested to submit detailed information on their funds and the transfer of money between their bank accounts and the accounts of Huobi and OKCoin. As reported by Cointelegraph on March 23, users are now required to submit these documents in order to continue trading Bitcoin:
- Your account info at Huobi:
- Your login info.
- Your account UID.
Explanations of the sources of your funds:
- Bank transfer records to Huobi bank account.
- Explanation of the sources of the funds you transferred.
- Relevant proof that can back up point b.
Provide sources of funds:
- Historical bank transfer record details.
- Text description of the fund source.
- Screenshot or pictures of bank information.
Use of Bitcoin or Litecoin, particularly how the user intends to use the funds.
Why more users are moving to LocalBitcoins
While the plan of OKCoin and Huobi to enable withdrawals was an optimistic and highly anticipated announcement for the local Chinese Bitcoin community, traders and investors within the Chinese Bitcoin exchange market didn’t expect the two exchanges to tighten their KYC systems to the point in which traders have to submit any information that pertains to Bitcoin purchases or trading activities.
For this reason, since February, LocalBitcoins volume for the BTC-CNY pair has continued to rise exponentially, nearly reaching 60,700,000 mln yuan weekly trading volume, which is equivalent to $8.82 mln. In consideration of the Chinese Bitcoin exchange market’s daily trading volume of $36.8 mln, more than three percent of trading is facilitated by LocalBitcoins.
Moreover, a significantly large number of high-profile traders purchase Bitcoin directly from miners or trade in a peer-to-peer platform apart from LocalBitcoins. In total, the OTC market could account for more than five percent of trading that occurs in China.
For the PBoC, the rise of the over-the-counter market and rapidly increasing volumes of peer-to-peer trading platforms such as LocalBitcoins may become a serious issue moving forward as these markets are very difficult to regulate. If LocalBitcoins continues to grow at the current rate, the PBoC could be pressured into improving their regulations and optimize policies to facilitate the growth of local Bitcoin exchanges.