New York Times – by NEIL GOUGH
HONG KONG — China’s biggest Bitcoin exchange was forced to stop accepting deposits in the Chinese currency on Wednesday, sending the price of the virtual money tumbling in one of its biggest markets globally.
The exchange, BTC China, made the announcement in a post on its verified account on Weibo, China’s Twitter-like messaging service.
The development comes less than two weeks after China’s central bank and four other government agencies that regulate finance and technology issued a joint announcement banning Chinese financial institutions from dealing in the virtual currency.
“For reasons we all know, BTC China has had to cease renminbi-account charging functions,” the exchange said in its message, referring to accounts in the Chinese currency. It said that it would continue operating and that deposits denominated in Bitcoins as well as renminbi withdrawals would be unaffected.
By Wednesday evening, the Shanghai-based BTC was quoting Bitcoins at about 2,300 renminbi, or about $380, apiece. That was nearly 40 percent lower than where they had traded on Tuesday and less than half of their peak price of 7,395 renminbi on Dec. 1.
According to Chinese news reports, the People’s Bank of China, the central bank, met Monday with more than 10 of the country’s biggest third-party payment processing companies, ordering them to stop all transactions involving digital currencies. Alibaba’s Alipay service, the country’s biggest processor of online transactions, was among the companies represented at the meeting, according to the reports.
On Dec. 5, the central bank and the four agencies jointly banned dealing in Bitcoin, saying the government was acting to “safeguard the interests and property rights of the public, protect the legal standing of the renminbi, take precautions against the risk of money laundering and maintain financial stability.”
At the time, a spokesman for the central bank took issue with describing Bitcoin as a currency: “It is not issued by a central monetary authority, it does not have the properties of legal currency and it is not a currency in the real meaning of the word.”
This is not the first time China has cracked down on digital currencies. In 2009, the government banned an online currency developed by Tencent, one of the country’s biggest Internet companies.