Amid ongoing uncertainty regarding their ability to continue operations, the top executives of five major China-based bitcoin exchanges abruptly cancelled scheduled appearances at this weekend’s Global Bitcoin Summit.
The move, a response to continued pressure from the People’s Bank of China, however, is unlikely to have a significant impact on what has become a core problem for these businesses – that the country’s central bank is looking to limit their interaction with key financial partners.
Now, a new report from Sina Tech suggests major Beijing-based exchange Huobi may be seeking to reposition its company’s services in response to the measures.
Speaking to the media outlet, Huobi co-founder Jun Du suggested that the company is considering a plan to use its exchange platform as a marketplace and price aggregator for digital currency buyers and sellers.
Under this proposal, Du told Sina Tech that users would form their own online chatroom group using a popular tool offered by the tech giant Tencent. Buyers and sellers within this group would then exchange bitcoin or recharge codes for RMB, interacting independently of the exchange.
Du explained that this workaround would relieve a current pain point, that Huobi must handle the transition of bitcoin to fiat currency, stating:
“What we are most focused on is the inflow of [fiat] monies.”
Although the comments are surprising, Huobi has been one of the more open exchanges when discussing a potential repositioning of its business.
The company previously reported that it has registered for overseas incorporation and offshore accounts that would perhaps allow it to continue as an exchange abroad.
Decline in volume and activity
Du also gave a glimpse at how the PBOC’s still-unofficial policies have affected the exchange. He noted that as Huobi lost key business partners, it kept open voucher deposits. This, Du said, led to a decrease in the speed of the exchange’s ability to bring in capital.
In total, Du estimates that the loss of these partner banks resulted in a 10% decline in user activity.
Further, he estimates that prices dropped 30% across all China-based exchanges in the month following these actions. The price of bitcoin had held steady above $500 on the CoinDesk Bitcoin Price Index before the rumors began in late March.
Uneven enforcement
The report also suggests that Huobi may have been more greatly affected by the PBOC’s warnings due to its location in China’s capital.
Sina Tech notes that BTC China, which is based in Shanghai, has been “under far less pressure”, complying with requests to close accounts, but otherwise continuing to operate normally.
BTC China CEO Bobby Lee has been outspoken about the ongoing regulatory issues in China, moving to calm international fears amid fears that the country would act aggressively against domestic exchanges.
However, it, too, is facing increased setbacks. On 6th May, BTC China announced it would suspend RMB deposits from the Bank of China. For more on this story, read our full report.
CoinDesk will continue to monitor this developing story.
Image via Huobi