The Chinese government's announcement last week that all digital currency exchanges on the mainland would be banned prompted a tumultuous week for the global cryptocurrency space, with prices of bitcoin, ethereum, and other tokens and currencies falling by dozens of percentage points. Still, the harsh words from the Chinese government prompted some analysts to speculate what the next step would be: the initial announcement left some space for clarification regarding questions of timeline and procedure.
That seems to no longer be the case, according to Coin Desk. Now, China's bitcoin exchanges have received instructions from the government detailing how and when they will need to shut down operations.
Operating Domestically Without Formal License
China's regulators have issued formal verbal instructions to cryptocurrency exchanges indicating their expectations for how the businesses will close down their operations stemming from the fact that they are operating without formal licenses. Exchanges are reportedly required to take a series of steps. A report, issued by the Leading Group of Beijing Internet Financial Risks Remediation office, outlines the procedures necessary for the exchanges, including means of handling customer data and banking partnerships.
Already, several of the most popular exchanges, including BTCC – the longest-running digital currency exchange in the world – have announced their closure dates. BTCC indicated in a series of tweets that customers would be able to retrieve investment money after the September 30 closure date. (See more: China's Ban on Bitcoin Exchanges Was Not Fake News After All.) Still, the exchange suggested that customers may want to "withdraw their funds as quickly as possible."
Authorities Crack Down
According to Coin Desk, exchanges will have a series of procedures to follow throughout the month of September, with each stipulation assigned a separate due date. (See more: How Might China’s Ban Affect Bitcoin?)
For instance, by 6 p.m. on September 20th, exchanges must offer a detailed "risk-free clearing plan" to be sent to the regulatory office, as well as a bank account used for depositing user funds. Closing announcements were supposed to have been made by midnight on September 15th.
Another stipulation mandates that "shareholders, controllers, executives, and core financial and technical staff of exchanges shall cooperate fully with authorities during the clearing." Further, exchanges must "report their developments daily to local authorities before the clearing is completed," and all exchange user and trading data should be saved and submitted to authorities.
Cryptocurrency markets fell by a significant margin upon the news out of China, although many have since recovered a substantial portion of the lost value. There remains a question as to whether other countries, including Japan, Singapore, and the United States, may also investigate further regulatory action in light of China's new position. (See also: Is China's Bitcoin Ban Good News for Hong Kong?)