Four major Chinese Bitcoin exchanges including BTCC, Huobi, OKCoin and Yunbi have officially begun to charge trading fees to all users, traders and investors, as of Jan. 24, 2017.
BTCC, the world’s oldest and largest Bitcoin exchange, first announced its plans to implement trading fees on Jan. 20. OKCoin, Yunbi and Huobi shortly followed BTCC, announcing their official decisions to charge trading fees to Chinese users within 24 hours since the announcement of BTCC.
Why did Bitcoin exchanges introduce fees?
All three Bitcoin exchanges that were previously inspected by the People’s Bank of China synchronized the level of trading fees at 0.2 percent, as a fixed service charge to all users purchasing and selling Bitcoin on Chinese Bitcoin exchanges. Yunbi also followed the roadmap of the three Bitcoin exchanges introducing a 0.2 percent trading fee beginning on Jan. 24.
OKCoin and BTCC released similar statements on the rationale behind the introduction of trading fees. Both Bitcoin exchanges stated that they envisioned introducing a fee-based trading to curb market manipulation and extreme volatility.
“BTCChina, our CNY exchange, will start charging fees for Bitcoin and Litecoin trading from 12 p.m. UTC+8, Tuesday, Jan. 24th,” said BTCC. “We are implementing fee-based trading to curb market manipulation and extreme volatility,” the exchange added.
The announcement of OKCoin revolved around issues noted by the PBoC in the initial preliminary inspection of OKCoin and Huobi. A local publication Shanghai Observer revealed that the PBoC was concerned with the offering of margin trading services and the absence of trading fees, as they resulted in “abnormal price fluctuations in the market.”
Change in global trading
On Jan. 18, Jamie McGeever of Reuters provided a chart obtained from the Bitcoin data company Bitcoinity to claim that the global Bitcoin exchange market which was dominated by U.S. companies is now run by Chinese Bitcoin exchanges.
However, analysts including Tuur Demeester and Bitcoin data firm Kaiko executive Stanislas Marion claimed that it is likely to see a major difference in the trading volumes coming from the Chinese Bitcoin market.
5 years ago, almost all Bitcoin trading was done in the US.
— Jamie McGeever (@ReutersJamie) January 18, 2017
Now, it's almost 100% in China.
Chart via Deutsche Bank's Torsten Slok. pic.twitter.com/PqOgU6EOWE
Marion described the global trading volume of Bitcoin as a completely different portrait of Bitcoin economy.
He wrote:
“Faced with the disproportion of Bitcoin trading volumes between CNY and USD exchanges, we isolated the effect of the spread on such volumes. As a consequence, we propose a spread-based standardization of the trading volumes which draws a completely different portrait of Bitcoin economy.”