Quote from: Searing on April 28, 2014, 12:13:11 AM

if this applies to BTC MINERS that are MADE in china ..this could get real ugly real guick...
China would not OFFICIALLY ban bitcoin..but the result would be the same if they go after the btc equipment guys as well

My understanding is that these measures are not due to PBoC being worried about the economic/monetary impact of bitcoin. It seems to be the law enforcement and national security agencies that are worried about criminal uses of bitcoin trading for money laundering, bribes, etc..

Whathever their ultimate origin, the orders are coming through the PBoC because banks and payment processors are subordinated to the PBoC, so it is the PBoC task to figure out the detailed rules and inform the banks etc..

This interpretation seems consistent with public statements by PBoC officials, that for them bitcoin is a harmless tradeable commodity "like stamps" and they see no problems in their ownership or trade. The problem seems to be the flow of yuan between clients of the exchanges. I suppose that one can easily launder money or pay a bribe that way.

In most exchanges, trades usually happen at the ends of the spread, when a buyer or a seller moves his order to meet a waiting order on the other side. However, the last time I looked at the individual trades at OKCoin, there were many small trades that occurred at random prices within the spread. Perhaps (I haven't checked) these middle-of-spread trades account for the steady background of volume (~10% of total volume) that one sees at OKCoin (and only there).

The explanation I can think of for these middle-of-spread trades is a buyer and a seller (perhaps the same person) agreeing to post matching orders at the same instant at that price. Such "rendez-vous" trades could be a way to launder bitcoins and/or money in a way that would be difficult for the police to trace, even if they had access to the deposit and withdrawal records of all the exchange's clients (which the exchanges presumably provide).

Only by analyzing the trade logs one could figure out who ended up transfering money to whom. Even then, if the trick is played with three or more client accounts (A "loses money" trading with B, who "loses money" trading with C, etc.) it may be impossible to detect intentional money transfers, say from a businessman to a government official.

As for mining, if this interpretation is correct, neither the PBoC nor the security agencies should object to it. On the contrary, if the mined bitcoins are sold outside China for dollars, they are adding to the country's exports, which makes the government happy.

EDIT: PS. here in Brazil, illegal gains have often been disguised by buying winning lottery tickets (at a premium ofcourse). A congressman made headlines a couple of years ago by winning dozens of large prizes, with tickets supposedly bought in the same remote small town. "I am a lucky guy", he explained.