China is considering shutting down local cryptocurrency exchanges

I'd rephrase the metaphor - someone is saying, "I saw him hit the cliff, he's done for!", and then it turns out he didn't hit the cliff. After a couple times you stop paying attention to this message, it's too unreliable.

I'll grant you bitcoin is volatile and "dangerous". That's true before China "bans" bitcoin. But the question is "did China just ban bitcoin" and the answer is "most probably not".

Caixin report in Chinese: http://m.finance.caixin.com/m/2017-09-08/101142797.html Gist: exchanges are banned, off-exchange one-to-one trades okay.

Caixin reported that this is based on clause 3 of the regulation issued on 9/4.

I have always wondered why they have tolerated it for so long. My theory was that high ranking party members use bitcoin to move their bribes out of the country.

On the other hand, high ranking officials might have alternative routes.

They can physically seize company's assets, and block bank accounts.

Three examples among many:

1. exchanges provide visibility into who is buying and selling crypto along with the ability to integrate crypto activities within real-name systems (i.e. whitelist wallets, etc.). This is the most efficient approach to market regulation as governments simply require exchanges to comply with policies and do not need to code the monitoring infrastructure themselves.

2. exchanges provide an infrastructure for supporting government initiatives -- the Chinese government is developing its own POW-based cryptocoin and has shown an interest in licensing ICOs and taxing transactions. And if China closes down all of the exchanges in the country it is a rather good question how it plans to accomplish either.

3. In the absence of a viable way to operate domestically, Chinese exchanges will simply move overseas (i.e. incorporate in HK), at which point they can continue to serve Chinese customers throughout the world without the need to bother with ANY Chinese policies (such as the elimination of zero-fee trades, KYC policies and data-sharing etc.).

What will happen in crypto is exactly the same thing that happened with video-sharing and group-sales: the government crackdown will be used to push uncooperative companies out of the market, and then licensing requirements will be used to tax those companies that remain while ensuring their compliance with the government fintech agenda. The current back-and-forth is part of an intra-government struggle for political primacy over cryptocurrency activities: the reason the big exchanges are silent is because they have their backers and are working to blunt the impact of these policies on their own businesses and the interests of those with whom they are affiliated. Smaller exchanges without this support are screwed and will close, but that is how China works -- it is not a market economy.