Leveraged trading in bitcoins halted in China – South China Morning Post

China has halted leveraged trading in bitcoins, nearly a week after the central bank launched its first-ever probe into platforms offering the virtual currency, following a market crash.

The People’s Bank of China (PBOC) found that the bitcoin trading platform BTCC in Shanghai, for instance, had been running outside its business scope and providing shadow financing to investors.

While the other two top-three platforms, OKCoin and Huobi, both based in Beijing, had violated rules by providing margin financing to investors and had not set up anti-money laundry systems internally, Shanghai-based Paper.cn reported on Thursday morning.

Staff with OKCoin and Huobi confirmed with the Post that leveraged trading had been halted, but added the probe led by the PBOC was still underway and the final results are still pending.

PBOC sent inspection teams to the above three major trading platforms last Wednesday, marking the first formal regulatory engagement with the sprawling market, which has been criticised for lacked any formal supervision.

Investors were able to borrow up to four times worth the money being used as collateral to buy bitcoins from the major platforms, via margin financing services. They can also borrow bitcoins with the leverage for short-selling purposes.

The leverage-backed speculation had pushed bitcoin prices up by more than 260 per cent since early 2016.

China’s bitcoin market accounts for more than 95 per cent of global trading. However, a major correction crashed the market on January 5, after the bitcoin price hit a historic high at 8,995 yuan. It also drew regulator attention to what is still an unregulated market.

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