OKCoin, China’s largest Bitcoin exchange and one of the world’s largest digital currency exchange by volume, funding, users, and page views, announced today the launch of a new Margin Trading feature through Peer to Peer (P2P) lending.

OKCoin’s users will now be able to borrow and lend bitcoins and fiat as well as invest in two new interest yielding funds, the “OK Standard Fund” and the “OK VIP Fund.”

From today, traders will be able to borrow up to 3 times their capital or lend their funds for an interest rate and loan duration of their choice without any risk as the exchange guarantees that the other side cannot default. The system will then automatically match lenders with borrowers, allowing for quick and painless transactions.

Taking financial innovation to a new level, OKCoin will also offer customers the choice of investing in OK Standard Fund, which offers interest in return for deposits, a risk-free investment as all deposits are insured. Wealthier customers have a second, higher risk, choice of investing in OK VIP Fund if they are able to invest at least 1,000 bitcoins and willing to take the risk of uninsured deposits in return for what is expected to be a higher interest rate.

The option of Margin Trading makes it possible to take higher advantage of a price increase or decrease by temporarily borrowing some of the funds to invest or sell bitcoins making it a highly popular option with traders. By utilizing such tools as Margin Trading and investment funds, the market becomes more liquid, leading to a decrease in volatility, thus addressing one of the main criticisms against bitcoin that it is too volatile.

Restarting MT Gox?

OKCoin has risen to become China’s biggest bitcoin exchange and the world’s biggest Litecoin exchange. It recently raised $10 million from Ceyuan Capital, VenturesLab, and famed Silicon Valley investor Tim Draper and is now aggressively expanding outside of China. In a recent post, a spokesman from OKCoin stated that the company had teamed up with BitOcean offering them the OKCoin technology, products and services in return for restarting the exchange, earning the goodwill of 120,000 creditors. In reply to requests for comments an OKCoin spokesman confirmed that OKCoin was highly interested in restarting MT Gox:

“[OKCoin is] working together with BitOcean in a possible restructuring of Mt. Gox. OKCoin would be licensing our technology and services to BitOcean. We are all currently waiting on the Japanese courts for the next step.”

If the OKCoin deal is approved, MT Gox creditors would be offered 49% equity in the new exchange, a certain percentage of profits and the ability to immediately withdraw the available 200,000 bitcoins and approximately $30 million which many see as a far more beneficial offer than the Sunlot deal.

Considering the recent alleged report from PCAC, an organization under the oversight of the central bank of China, to strictly enforce exchange funding rules, especially in regards to third-party vouchers, many speculate that OKCoin may find a new workaround by restarting MT Gox or by acquiring its assets, especially the highly valued customer base, most of whom were traders.

The Dream That Remains

China enthusiastically adopted bitcoin in 2013 with bitcoin-qt downloads surpassing all countries, including America. The Chinese government seemed to tactically endorse the new inventive currency when CCTV aired an hour-long programme fully devoted to bitcoin. As the Chinese flocked to the currency and other altcoin currencies, the great bubble of November 2013 followed when the price of a bitcoin saw an astronomic rise from $100 to $1,200 at its peak.

Following the central bank ruling in December 2013, the future of bitcoin in China is uncertain. In April of this year, a report from allegedly the Chinese central bank ordered banks do not provide services to bitcoin-related businesses. Loopholes were exploited by bright Chinese entrepreneurs, followed by further alleged reports from the Chinese central bank or its subsidiary organizations.

Trading still continues but at a far lower volume than at its heyday in 2013. However, as shown by OKCoin and other Chinese bitcoin companies, Chinese entrepreneurs remain focused on taking advantage of the new opportunities created by bitcoin’s innovation in finance as economic incentives that have lifted hundreds of millions of Chinese from poverty test the rulings of the Chinese central bank in a cat and mouse game of rules and loopholes.

Image source: flickr