After Crackdown, a New Bitcoin King Emerges in China

Huobi09 Jan 2014 / Wired – Back in October, we marveled that a then-unknown company named BTC-China had suddenly become the world’s most popular Bitcoin exchange, helping to push the value of the digital currency over $200.

But less than three months later, Bitcoin prices have quadrupled, and there’s a new top dog in China: another virtually unknown company called Huobi.

At the moment, Bitcoin is the Wild West of international finance — an international peer-to-peer network of computers that, as a whole, lies out of the reach of any one country’s regulation. But when Bitcoin bumps against closely regulated financial services businesses, things become even wilder. That’s what’s happening in China, where regulators stepped in last month to forbid financial services companies from doing business with the Bitcoin exchanges — a move that instantly changed the landscape.

Big Chinese businesses that were warming up to Bitcoin, such as search giant Baidu, suddenly dropped it. Bitcoin prices plunged.

It appeared that the government was going to make it tricky, if not impossible, to fund Bitcoin exchange accounts. But that hasn’t turned out to be the case. Big companies like Alibaba have dropped bitcoin business, but the exchanges are still doing business, they’ve just been forced to make a few changes. “In the past month, things have been quite interesting here in terms of Bitcoin,” says Bobby Lee, the CEO of BTC China.

While the Central Bank guidelines made things more difficult for Bitcoin businesses, they did not outlaw the currency altogether. And that was enough for people like Lee. “Because Bitcoin exchanges have been given legal room to exist, they essentially found different ways to accept money for deposit,” he says.

Since customers can no longer use payment processors to fund accounts, BTC-China has hacked together a voucher system that let’s new people set up accounts without actually transferring money to the Chinese exchange. Instead, customers who want to cash out are selling their BTC-China dollars as vouchers on sites such as Paipai.com, an online retail site similar to eBay. To fund a BTC-China account, they simply enter their voucher code on the exchange’s website. “There’s a healthy network of resellers who are selling vouchers,” says Lee….. Read more

http://www.wired.com/wiredenterprise/2014/01/huobi/

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