China Bans Payment Companies From Clearing Bitcoin -- BitcoinNewsPortal

China Bans Payment Companies From Clearing Bitcoin

Chinese central bank officials told third-party payment service providers to stop offering clearing services to online Bitcoin exchanges, according to China Business News, which is affiliated with the Shanghai government.

Companies currently offering services must end services by the Chinese New Year, a weeklong holiday that begins on Jan. 31, the newspaper cited Zhou Jinhuang, deputy director of payment clearance at the People’s Bank of China, as saying at a meeting with more than 10 third-party payment service providers.

China’s central bank regulated the virtual currency for the first time on Dec. 5 by banning financial institutions and payment providers from conducting transactions in the virtual currency. Zhou was cited as saying by China Business News that the rules would be “strictly enforced.”

“The PBOC statement on Dec. 5 was somewhat vague and there is more clarity now,” Zennon Kapron, managing director of financial consultancy Kapronasia, said in an interview in Shanghai. “The way it’s reading now is that after the Chinese New Year, you won’t be able to get your money off the platforms.”

The PBOC’s news department didn’t immediately comment on the Bitcoin report when contacted by Bloomberg News. Two calls to Li Yue, director general of the central bank’s payment and settlement department, were unanswered.

Bank Ban

Bitcoin prices on BTC China, China’s largest exchange, plunged to as low as 3,251 yuan ($535) Dec.17,2013 before rebounding to 4,155 yuan at 4:16 p.m. local time. The drop in prices was triggered by concern that PBOC officials may visit lenders next to enforce the ban against Bitcoin settlement, Kapron said. The number of banks and payment providers that can transact Bitcoin has shrunk since the ban was announced, he said.

Bitcoin prices on the CoinDesk index jumped as much as 11 times since October, prompting former Federal Reserve Chairman Alan Greenspan to call the market a “bubble.”

Speculation that authorities in China may halt trading in Bitcoin surfaced after police arrested three people on suspicion of stealing money from investors through a fake online exchange.

GBL, a Bitcoin trading platform in China that began operating in May and had 4,493 registered users at the end of September, abruptly closed on Oct. 26, the official Xinhua News Agency reported Dec. 3., citing police in eastern Zhejiang privince’s Dongyang city.

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