Caixin
Mar 27, 2014 05:17 PM

PBOC Rule Means Bitcoin Websites in China Must Close, Expert Says

(Beijing) – The central bank has taken a step that at least one expert says means all bitcoin trading websites in the country must close.

The People's Bank of China (PBOC) renewed its crackdown on bitcoins by requiring banks and payment companies to close all the accounts opened by the operators of websites that trade in the virtual currency by April 15.

This means people will only be able to use cash to buy bitcoins, an analyst who has been following the matter said, and will force all trading websites in the country to close.

"The only one way out for bitcoin websites is moving their servers abroad and using the service of foreign banks and payment companies," the expert said.

The requirement, which Caixin saw in a document the central bank's headquarters recently sent to regional offices, says money can be taken from the accounts before the deadline, but no deposits can be made. Banks that fail to close the accounts will be punished, the PBOC said, but it did not elaborate on what those punishments would be.

The central bank document listed 15 trading websites whose accounts must be closed.

The regulator and four other central government agencies jointly issued a circular last year that prohibited payment companies and financial institutions from providing services to bitcoin trading platforms.

The circular said bitcoins are a commodity, not a currency. It added that investors are free to trade in bitcoins at their own risk, but should know they cannot be used as legal tender.

Bitcoins are created by computers linked in a network. To get them, a person can either make a purchase on a trading platform or become a "miner," who uses a computer to process data generated when other miners and traders create and trade bitcoins.

The value of bitcoins rode a rollercoaster last year as demand fluctuated. The highs exceeded 8,000 yuan per unit and the lows dipped to only several hundred yuan. Prices on March 27 were around 3,500 yuan per bitcoin.

Experts estimate that transactions on Chinese bitcoin trading platforms account for about 60 percent of the global total.

Mt. Gox, once the world's largest exchange, filed for bankruptcy in February.

(Rewritten by Wang Yuqian)

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