Big changes in the works at Chinese exchanges Huobi and OKCoin

Under increasing pressure from the People’s Bank of China, two of the “big five” Chinese bitcoin exchanges have announced plans to alter their business models. Although the PBoC issued new rules in December dramatically limiting access to the country’s banking system for bitcoin-based business, those rules have only been meaningfully enforced in recent weeks. Several bitcoin exchanges have been forced to close their accounts, and many major banks have cut off customer deposits. Yesterday, the big five released a joint statement committing to substantial self-regulation. Today’s announcements appear to be the first direct actions resulting from that commitment.

Speaking with Sina Tech, Huobi co-founder Jun Du suggested that his company would soon be moving away from it’s role as an exchange. Instead, Huobi would be repositioning itself as a bitcoin marketplace and price aggregator, serving as a buyer/seller matching service and removing them from the fiat/bitcoin transaction. Although details were limited, it appears that Huobi might be moving towards a LocalBitcoins-like model.

A slightly less dramatic move comes from OKCoin, which announced that it will be temporarily halting its peer-to-peer margin trading service on May 10th. According to OKCoin’s manager of foreign operations Zane Tackett, the move is part of an upgrade strongly influenced by PBoC pressure. Speaking with CoinDesk, Tackett said that the new version of the service will require customers to “sign a contract acknowledging the risks associated with using a margin trading system allowing them access to this service.”

Not all bitcoin exchanges in China seem to be feeling the same level of banking pressure, however. In the Sina Tech report, it was noted that BTC China’s woes have been limited to the loss of customer-deposit support from a single bank. The report notes that regional politics may play a role, as BTC China is based in Shanghai, while Huobi and OKCoin are both basd in the capital city of Beijing.

Bitcoin trading volume in China has dropped considerably in recent weeks, from nearly a quarter of all trades to a current level of around 7.5%.