Sun, Dec 08, 2013 - Page 13 News List

Baidu bans bitcoins after China ban, causing drop

Bloomberg

Baidu Inc (百度), China’s biggest search engine, stopped accepting bitcoins after the nation’s central bank barred financial institutions from handling transactions, triggering a drop in the virtual currency.

Bitcoin fell more than 20 percent to 4,800 yuan (US$790) on BTC China, the most active online exchange where it is traded for the Chinese currency.

A Baidu Web site-hosting venture started accepting the digital money on Oct. 14 as bitcoins gained popularity in China, fueling a global rally. Prices topped US$1,000 last week, compared with about US$138 two months ago on Bitstamp, an online exchange. The People’s Bank of China said bitcoin is not a currency with “real meaning” and cannot be accorded the same legal status.

“Baidu’s Web site-acceleration platform decided to suspend bitcoin payment acceptance from Friday as recent large fluctuations in bitcoin’s value makes it unable to safeguard users’ interests,” the company said in a statement on its Web site yesterday.

The decision follows the Chinese government’s announcement, according to the Beijing-based company.

China’s central bank said the public is free to participate in Internet transactions, provided they take on the risk themselves. The ban on financial institutions handling bitcoins signals concerns that the digital currency may threaten capital controls and financial stability. The country became the world’s biggest bitcoin trader this year, BTC China said.

US officials have also told lawmakers such payments could be a legitimate means of exchange.

The People’s Bank of China said financial institutions and payment companies cannot give pricing in bitcoin, buy and sell the virtual currency or insure bitcoin-linked products, according to a statement on the central bank’s Web site.

“We’re happy to see the government start regulating the bitcoin exchanges,” BTC China chief executive officer Bobby Lee (李啟元) said in a telephone interview before the central bank announcement on Friday.

Regulations would be for “the good of the consumer,” he said. BTC is seeking recognition of the currency, so it can be used to buy goods and services instead of being used for speculation, he said.

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