By Adam Rose
BEIJING Dec 18 A Chinese bitcoin exchange
platform announced on Wednesday that it had stopped taking
Chinese yuan deposits, sending the price of the virtual currency
down sharply as China broadened its crackdown on domestic
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 Beijing banned financial
institutions from trading in bitcoin, due to the risks involved.
"Due to new government regulations, BTC China will
temporarily suspend CNY deposits. BTC deposits/withdrawals and
CNY 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
On Tuesday, the Chinese Business News reported that the
government had asked third-party payment services to stop
handling bitcoin transactions.
It was not immediately clear whether other exchange
platforms were affected.
The yuan-bitcoin exchange rate on BT China has dropped 46
percent from Monday, and 60 percent since a peak on Dec. 1. The
exchange rate on rival platform FXBTC.com has fallen 70 percent
from its Nov. 30 peak.
Over the past two months, the value of bitcoin relative to
the 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. [ID: nL4N0JK1KZ]
The statement, on the website of the People's Bank of China
(PBOC), said the government would act to prevent money
laundering risks from bitcoin, which is not backed by a
government or central bank.
The PBOC may have cause to be concerned about bitcoin, which
is anonymous, untraceable, and can be carried on memory sticks
or transmitted electronically, because it represents a potential
hole in the country's capital controls.
However, analysts point out that, given the tiny value of
the total bitcoin in circulation relative to other currencies,
it is unlikely to have much impact on the wider economy.