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Bitcoin price plunges after trading site stops accepting yuan deposits
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A CHINESE Bitcoin exchange platform said yesterday that it had stopped taking yuan deposits, sending the price of the virtual currency down sharply as China broadened its crackdown on domestic Bitcoin trading.
Shanghai-based BTC China, the world’s largest Bitcoin exchange by volume, posted a notice about the new regulations on its website, two weeks after the country banned financial institutions from trading in Bitcoin, due to the risks involved.
“Due to new government regulations, BTC China will temporarily suspend yuan deposits. BTC deposits/withdrawals and yuan withdrawals are not affected, and will continue to operate in the interim,” BTC China said in the notice.
The platform could no longer handle new deposits because its third-party payment provider had abruptly cut off service, said Chief Executive Bobby Lee.
“It was disconnected against our will,” said Lee, adding that BTC China had switched to the provider on Sunday as a precautionary measure.
On Tuesday, the Chinese Business News reported that the government had asked third-party payment services to suspend handling Bitcoin transactions.
It was not immediately clear whether other exchange platforms were affected.
About one hour after the notice, the price of 1 Bitcoin at BTC China dived as much as 35 percent from 6,970 yuan (US$1,140) to just more than 4,500 yuan. Around 7pm yesterday, the bid price stood at just 2,023 yuan.
Over the past two months, the value of Bitcoin relative to the US dollar has skyrocketed some 800 percent as speculators have piled into the currency, according to bitcoinity.org.
Bitcoin market operators say Chinese nationals are major market participants and hold an outsize share of the total number of Bitcoins in circulation.
The government this month issued a statement banning financial institutions from trading in Bitcoin, but did not ban individual trading.
The statement, on the website of the People’s Bank of China, said the government would act to prevent money laundering risks from Bitcoin, which is not backed by a government or central bank.
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