BTC China in Discussion With Regulators Over Bitcoin Recognition

UPDATE: with some extra clarification from BTC China CEO Bobby Lee.

The world’s busiest bitcoin exchange, BTC China, has been in talks with regulators that concern bitcoin’s level of recognition as an official currency, according to Bloomberg Businessweek.

While there have so far been some local-level discussions on relevant issues, the company has not yet made progress arranging high-level meetings, said BTC China CEO, Bobby Lee.

It’s still very much in the early stages and BTC China hasn’t clarified exactly which government arm, if any, will ultimately decide bitcoin’s status.

“We already consult with a number of local commissions and bodies in various capacities,” said Lee.

“For example, the securities regulation commission, the Ministry of Information Technology when we register a site, law enforcement if there’s a crime, that sort of thing.”

“What we want to make really clear is that we’re eager to talk to government bodies about regulation. We’re eager for that to happen but there’s no concrete progress yet. We want to show that we’re completely out in the open, not trying to hide anything at all.”

This isn’t surprising, given the reluctance of governments worldwide to make official statements about the currency’s legal status.

Official approval

To grant official approval would likely cause a spike in activity, with many fearing activity on such a grand scale could undermine one of government’s key economic powers: overseeing fiat currencies.

This hasn’t stopped a recent flurry of interest from high-level government officials, as bitcoin’s value soars too high to ignore. At the time of writing, the bitcoin price on BTC China was 6,267 CNY, or $1,027. Mt. Gox’s price was $1,050, and it was around $990 on the Coindesk BPI.

The upper echelons of government feature many opinions on bitcoin, including some that have shifted over the years. Senator Chuck Schumer, who in 2011 described bitcoin as “an online form of money laundering,” and called for a crackdown, recently tweeted that the cryptocurrency had “significant potential”.

Deputy governor of China’s People’s Bank, Yi Gang, hinted at a personal (unofficial) approval of bitcoin exchanges and people’s ability to trade in and out of digital currencies, but also said it would be impossible for the central bank to recognise bitcoin “in the near future”.

Grey area

BTC China has taken Gang’s comments on board, and Lee has continued to hold discussions with local regulators.

He has also answered questions about how bitcoin should be regulated, remaining optimistic about the long-term, describing bitcoin’s current status as:

“Not on the black list and not on the white list. It’s in the grey area.”

In the bitcoin universe, anything short of a call for blacklisting can be taken as progress. But while its “grey area” status allows exchanges and payment processors to function reasonably well at the moment, many think some form of recognition and subsequent regulation is necessary for bitcoin to gain widespread acceptance.

Though stories of bitcoin’s black market usage have faded, they have been replaced by regular exchange security failures and thefts on nearly every continent.

China has not been immune to this: the so-called ‘Hong Kong’ bitcoin exchange GBL, which was later found to have its servers located in mainland China, closed suddenly and vanished on 26th October, along with $4.1m of its customers’ money.

Shanghai Image Via Shutterstock