PBOC bars banks from Bitcoin transactions
Print Edition
China’s central bank yesterday barred financial institutions from being involved directly and indirectly in transactions related to Bitcoin as it bids to strengthen rules on the digital e-money.
It was also the first time for China, the world’s largest Bitcoin market, to identify the virtual currency, whose trading value has been rising rapidly worldwide.
“Bitcoin isn’t a currency with real meaning and doesn’t have the same legal status as a currency. But the public has the right to trade it (personally) as normal online product and service,” the People’s Bank of China said on its website yesterday.
Mark Matthews, head of research at Swiss private bank Julius Baer for Asia, also said: “Bitcoin is not a real currency. In fact, I don’t think virtual assets have a lot of wealth.”
The PBOC’s ban means that financial institutions can’t be involved in any direct and indirect trading of Bitcoin, introduced in 2009.
“We’re happy to see the government start regulating the Bitcoin trading,” Bloomberg News quoted BTC China’s Chief Executive Bobby Lee as saying. Regulations would be for “the good of the consumer,” Lee said.
BTC China is the main Bitcoin trading platform in the country.
Individual investors of Bitcoin will be warned about the risks of the virtual currency, said a statement issued by five regulators, including the PBOC, the China Banking Regulatory Commission and the Ministry of Industry and Information Technology.
After the release of the warning, the price of 1 Bitcoin at BTC China dived from 6,970 yuan (US$1,143) to as low as just over 4,500 yuan in about one hour, down by 35 percent. It rebounded to about 5,500 yuan per Bitcoin later.
The value of Bitcoin was below 100 yuan (US$16.30) a year ago.
Earlier this week, former US Federal Reserve Chairman Alan Greenspan also said Bitcoin prices are “unsustainably high” and the virtual money isn’t a currency.
The peak daily trade volume of Bitcoin reached 90,000 Bitcoins on BTC China while the peak transaction value has surpassed 200 million yuan, according to the company’s website.
China has become the world’s biggest market of Bitcoins with more than half of the global volume, according to BTC China.
There are about 12 million Bitcoins in circulation, according to Bitcoincharts, a website that tracks activity across various exchanges.
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