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Bitcoin trading volumes plunge in China after introduction of transaction fees
Bitcoin trading volumes in China dropped as much as 90 percent Tuesday after local exchanges introduced transaction fees for the first time.
The three largest Chinese exchanges introduced the fee of 0.2 percent on all buy and sell orders in response to an ongoing investigation by China’s central bank into whether the companies have correct licenses and have implemented anti-money laundering systems, as well as whether they are involved in market manipulation.
According to Bloomberg, one-hour volume at OkCoin fell 89 percent to 1,026 bitcoins at 1 p.m. local time Tuesday, from 10,062 during the same period on Monday, while Huobi and BTC China saw declines of 92 percent and 82 percent, respectively.
There is no suggestion that the government enforced the implementation of the transaction fees. It appears that the companies acted proactively ahead of any finding made by the investigation into their practices, with all three saying they were put in place in a bid to stop market manipulation and lessen the effects of price volatility.
The move to introduce transaction fees follows an announcement last week that the companies were also ceasing support for margin trading following a confirmed request by the People’s Bank of China to do so. Cryptocoin News reports that initial investigations by the bank pointed to “irregularities” in the way the bitcoin exchanged operated, with BTC China found to have been operating beyond the legal scope of its business in offering loans for trading.
Some 80 percent of bitcoin trading in the Middle Kingdom is believed to have been automated prior to the move to implement transaction fees. The fees remove the ability for those platforms to make a profit on strategies such as cross-exchange arbitrage.
Surprisingly, the news out of China, which accounts for an estimated 90 percent of global bitcoin trading, didn’t seriously affected the price. Bitcoin’s price dropped only slightly in trading Tuesday, closing the day at $885.49, down from a daily high of $918.43.
Image credit: jonrussell/Flickr/CC by 2.0
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