Macao Monetary Authority Regulating Bitcoin

Written by Fiona Zhao || 20 Jun 2014

After successive Bitcoin crackdown by mainland regulators, banks and online merchants, Bitcoin is left hanging in China.

Although BTC China, the largest exchange before the crackdown, has tried to save the industry by rolling out both physical and virtual Bitcoin ATMs, the results aren’t very encouraging. At the same time some Macau and Hong Kong industry participants are still confident in Bitcoin. It is reported that shortly after BTC China’s Bitcoin ATM launch on April 15th, Coinnet, a Hong Kong enterprise, announced its plan to roll out two-way Bitcoin ATMs. There will be 20 for the first batch in Hong Kong and two are planned to be installed in Macao by the end of June. However, these plans will have to be adjusted due to the new announcement by Monetary Authority of Macao (MAM) made on June 17th.

The key aspects of the announcement are: 
1) Bitcoin is a virtual commodity rather that fiat currency or a financial tool
2) Financial activities should be authorized under the Financial System Act (FSA) approved by Decree-Law No. 32/93/M of 5th July. The law prohibits commercial institutions to utilize credit institution terms such as ATM when doing business or to use in the institution names.
3) Alert people to pay attention to illegal activities facilitated by virtual commodities, like Bitcoin, including money-laundering and terrorist financing.

Obviously, the regulation from Monetary Authority of Macao is in line with PBOC’s policy. Then whose interest does Bitcoin hurt? To answer this question, we need to consider one of Bitcoin’s characteristics, which is its free cross-border movement. To make matters worse, the launch of Bitcoin ATM in mainland China and potential rolling out of two-way Bitcoin ATM in Macao have elevated a potential threat to PBOC’s exchange controls.

Lately, under China's central government’s anti-corruption policy, Macao has been cooperating with China Unionpay to force out illegal cash transactions. According to a relevant regulation, the entry-exit limit for a Chinese individual in cash is RMB 20,000. However, many mainland tourists view this amount as insufficient for their gambling trips.... They run their China Unionpay cards through POS terminals in jewelry shops or pawnshop inside casinos to get Hong Kong dollars is cash in return - completely circumventing exchange controls. Such transactions have raised China Unionpay’s as well as MAM’s attention.

According to Wilson Wong, an official in MAM, the transaction volume via China Unionpay cards in shops inside casinos and nearby has reached USD 22.5 billion in 2013. The figure is almost half of Macao’s total gambling industry revenues in 2013. To curb the huge amount of cash being transferred illegally, Macau government has started to limit the use of China Unionpay POS terminals. It is reported that some jewelry shops and pawnshops have received the official documents from the MAM and are required to remove China Unionpay POS terminals before July 1st. In this situation, Bitcoin seems to become a perfect alternative. However, it is this “perfect alternative” status that puts Bitcoin in line of fire.

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