iGaming Business – The value of Bitcoin has slumped after reports emerged that China has taken action to restrict trading in the virtual currency.
According to the BBC, BTC China, the country’s first Bitcoin and Chinese Yuan trading platform, said that local payment companies had been blocked from providing it with clearing services, meaning it can no longer accept Yuan-based deposits.
Bitcoin value fell as a result of the reports with one Bitcoin trading for as low as Y2,560 (€308.4/$421.6), a significant drop on the all-time high of Y7,588 recorded in November of this year.
Virtual currency exchanges in China are not licensed to accept or pay out Yuan to customers and are instead reliant on independent clearing houses act as the ‘middleman’ in the transaction.
“We essentially got notice from our third-party provider today (Wednesday) that they will discontinue accepting payments for us and new deposits,” BTC China’s chief executive, Bobby Lee, said.
“We’re still operating a Bitcoin exchange in China legally, and we’re still allowing people to deposit and withdraw Bitcoin, and withdraw renminbi (Yuan).”
The news comes shortly after a meeting on Monday between officials from the People’s Bank of China and 10 clearing houses at which the firms were informed they had until the end of January 2014 to sever ties to China’s Bitcoin exchanges.
An earlier notice had also banned local banks from handling transactions that involve Bitcoins.
Jinny Yan, an economist with Standard Chartered bank, said the move reflects China’s stance on keeping as much Yuan in the country as possible in order to grow its domestic economy.
“China is trying to grow its domestic economy and rebalance it from an export and investment-based model to a consumer driven one over the next decade, and to do that the authorities want to keep as much Yuan within the country as possible,” Yan said.
