Rumors are spreading that China is set to shut down local bitcoin exchanges. Headlines may be squawking that the price of bitcoin has plummeted because of this, but nothing out of the standard deviation of regular bitcoin volatility has occurred in reaction to this news. As news sites battle for your clicks, they have to put in emotional words like “plummet” to get you to read the lede sentence of the article, but no plummeting has taken place.

First of all, local exchanges themselves are denying that any ban has been enacted. This denial can be taken with a grain of salt because of course local exchanges have a vested interest in denying that their business is banned for as long as possible. Second, the denial report comes from ZeroHedge, a somewhat hysterical website that, while it does have accurate reporting at times, does have the tendency to sensationalize.

The real issue is not whether a ban on local exchanges is happening or not, but whether such a ban means anything at all. As we’ve covered before, most of Chinese bitcoin trading volume is already off the direct exchanges and has moved almost entirely to P2P networks like Localbitcoins. Beijing has been clear that P2P networks are not being targeted, but only direct exchanges. This shift in trading volume happened back in February and has been mostly spurred by the desire to maintain privacy. The Chinese government is already monitoring the exchanges with hawk eyes, so if you want to move money with privacy in China, you have to do it peer-to-peer.

What’s interesting then is the hidden message that China is sending by banning only direct exchange sites, which now constitute a negligible amount of bitcoin trading volume in China. The hidden message is, “We don’t like bitcoin, but we’re too afraid of it to put up a real fight.”