There are brand new reports coming out today in the Chinese financial press that the People’s Bank Of China (PBOC) is ordering banks and payment processors to close the accounts used by Bitcoin Exchanges. Similar rumours circulated on the Chinese blogosphere yesterday and were already considered to be fake but today’s reports appear to be more substantiated and have caused the price of Bitcoin to drop by about $50 or almost 10% true to the time of this writing.
In December of last year, we reported that the PBOC banned all Chinese payment firms from working with Bitcoin exchanges, which led to a crash in the price of the benchmark digital currency. After a short time the Chinese exchanges found ways to go around the ban by selling Bitcoin Vouchers, accepting fiat deposits as wire transfers to the personal bank accounts of the managers and other creative measures. Now the PBOC is supposedly demanding that the banks and payment firms will close all accounts related to the exchanges by the middle of the next month and it names the leading fifteen venues specifically to prevent misunderstandings.
The reputable Chinese website Caixin is reporting that the PBOC renewing its crackdown on Bitcoin exchanges 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 requirement, which Caixin reports claims to have seen in a document the PBOC 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.”
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Death by a thousand cuts? The PBOC did not try to ban the use of digital currencies all together so far in China. But, every time the Chinese central bank makes a statement regarding Bitcoin it further drives the price down. Investors and merchants who rely on stable means of exchange to carry their day to day business might eventually just give up on the idea of non fiat electronic currency as they see that not only a bank statement can send the market into a free fall but even unconfirmed reports that may come out every day without warning. In that way, the PBOC can effectively prevent the mass adoption of Bitcoin in China without having to resort to legal bans.
Update: Leon Li of Huobi, CEO of the largest Chinese Bitcoin exchange by trade volume responded to the new reports. Speaking with DC Magnates he said: “We have not received any official notification, partner banks has not yet received the relevant notification as we are waiting for a confirmation message.”
The list of Chinese Exchanges specifically targeted by the PBOC: BTC-China, Huobi, Okcoin, Fxbtc, 比特币交易网, 中国比特币, btc100, 比特儿, 808比特币, 比特时代, 牛币网, 比特币国际, 天和比特币, 42btc and btc star.