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China Cracks Down On Bitcoin

CHINA HAS MOVED to snuff out the nascent trade in bitcoins, the faddish virtual currency. It is banning Chinese payment companies from providing BTC Bitcoin, the world’s highest-volume bitcoin exchange, with clearing services. This effectively stops the exchange from taking yuan-based deposits as it is not licensed by the People’s Bank of China to accept or pay out yuan deposits, but has to use the services of licensed clearing houses.

The value of the virtual currency tumbled to roughly a third of its November peak of $1,250 after BTC Bitcoin said it would stop accepting new deposits. The clearing houses have reportedly been told they have until the end of January to close out their accounts with BTC Bitcoin and similar exchanges.

Commercial banks and other financial institutions were banned at the start of December from making transactions involving bitcoin. Central bank officials are suspicious that the virtual currency is being used to circumvent currency controls, and particularly that it is being used to move ill-gotten wealth offshore against the background of the crackdown on corruption.

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