Beijing - China’s central bank barred financial institutions from handling bitcoin transactions yesterday, moving to regulate the virtual currency after an 89-fold jump in its value sparked a surge of investor interest in the country. The bitcoin’s value plunged more than 20 percent to below $1 000 (R10 384) on the BitStamp internet exchange after the People’s Bank of China said it was a currency with no “real meaning” and did not have the same legal status. The public was free to engage in internet transactions provided they took on the risk themselves.
The ban reflects concern about the risk that the digital currency may pose to China’s capital controls and financial stability after a surge in activity this year made the country the biggest bitcoin trader, according to exchange operator BTC China. Bitcoin’s price has jumped more than ninefold in the past two months alone, prompting former US Federal Reserve chairman Alan Greenspan to call it a “bubble”.
“The concern is that it interferes with normal monetary policy operation,” Hao Hong, the head of China research at Bocom International, said. “It is difficult to regulate and could be used for money laundering. I think the central bank is right to make this move.” - Bloomberg