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Bitcoin Banned By China But It Actually Doesn’t Matter

by on December 5, 2013
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Bitcoin banned by China

The People’s Bank of China, the country’s central bank, and four regulators banned financial institutions and payment services from Bitcoin-related business earlier today. The bank said Bitcoin did not qualify as a currency but private individuals still are allowed to trade them at their own risk.

The reason of this measure was to avoid harm to the public and to the legal monetary status of the yuan that might occur as a result of “excessive speculation” in Bitcoin and other virtual goods, said the statement.

Shortly after the announcement Bitcoin prices in China dove 25%. Mt. Gox, the biggest global trading platform, plunged nearly 30% from $1,238 earlier this morning, they have since bounced back—they’re now down about 12% from the morning’s high.

“As Bitcoin transactions can be done anonymously and are not restricted by location, it’s difficult to monitor capital flows and it therefore facilitates money laundering and financing for terrorist activities,” the People’s Bank of China said.

“There have been criminal activities using Bitcoins, such as trading of drugs and guns,” the bank added. “Relevant cases are under investigation.”

Approximately a third of global Bitcoin transactions have been taking place in China and BTCChina became the world’s biggest bitcoin exchange by trading volume last month.

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In July, Thailand’s central bank banned trading and use of Bitcoins. On the other hand, last month, the biggest private university in Cyprus said it would accept Bitcoins for tuition.

Do you believe Bitcoin is a real currency?

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