China bitcoin arbitrage ends due to capital control

The price gap between bitcoins trading in Chinese yuan and those sold for other curriencies has closed up as Chinese traders work around capital controls, Reuters reported. A key driver of this price gap was the porous nature of China’s capital control, which makes it difficult for speculators to get their money back into another currency. Traders could earn profits by buying bitcoins in dollars, resell them at a higher price on China’s main local exchange, BTC, and then convert the yuan back to dollars. However, the spread between bitcoins has disappeared in recent days as China’s central bank forbid commercial banks from dealing in bitcoins last week.