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Chinese banks can’t deal in ecoins

It is 2:30 am in California and the ecoin world is ablaze with recent news out of China that banks are banned from participating in ecoin transactions. According to a statement on the central bank’s website, banks can not give pricing in Bitcoin, buy, sell or insure Bitcoin. The immediate reaction from the market is panic. However the news out of China was not nearly as bad as it seems.  It is actually unexpected good news.

Most banks can’t deal in ecoins

China is not the only country in the world to be restricting its financial institutions from participating in ecoins.  Most banks are forbidden from investing in or buying/selling  speculative, unregulated, anonymous transactions. Have you ever seen a Bitcoin option from your local bank? The Central Bank also said that individuals in China are free to buy, sell and hold ecoins as long as they take on the risk themselves.

This is great news for ecoins

Banking in China is not great, the banks pay almost no interest and the government has authority to take money out of banks. Ecoins represent a place to park wealth and transfer money in and out of the country. For the first time, the Chinese Government, through the Bank of China has nodded that its people can continue to buy, sell and trade ecoins. This is a pro individual freedom and pro ecoin position. Read more from Bloomberg News.

Here is the message as translated and edited by on Quora:

中国人民银行等五部委发布《关于防范比特币风险的通知》-中国人民银行

1) The Chinese government does not consider bitcoin to be a currency.  This is very good news as it means that bitcoin is not subject to currency restrictions.

2) Financial institutions cannot offer services in bitcoin including deposits, clearing, and market making, nor can they do things like offer loans in bitcoin.

3) Bitcoin exchanges can operate as long as the abide by the provisions of the telecommunications regulations and abide by anti-money laundering rules.  The telecom regulations are primarily censorship restrictions which are irrelevant for bitcoin exchanges.  Bitcoin exchanges will be allowed to operate as long as they get the real identities of bitcoin users.

4) The public should be made more aware of the risks of bitcoin.

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