Bitcoin/USD tumbles as PBoC bans payment firms from clearing bitcoins

on Dec 17, 2013
Updated: Oct 21, 2019

**, Tuesday 17 December:**

The BTC/USD fell on the Mt Gox exchange today to its lowest price in a week at $770, after the People’s Bank of China confirmed rumours that it has banned third-party payment companies from offering clearing services to bitcoin exchanges.
Yesterday the PRC’s central bank held a closed-door meeting with about a dozen of the top third-party payment firms and issued the edict that those companies must stop doing business with bitcoin exchanges by the Chinese New Year on 31 January. The decision applies also to other digital currencies and all bitcoin clones have likewise slumped today.

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The People’s Bank of China regulated the online form of money for the first time on 5 December by implicitly forbidding banks to conduct transactions in virtual currencies, which essentially halted the parabolic rise of bitcoin’s price.

“The PBOC statement on Dec. 5 was somewhat vague and there is more clarity now,” said Zennon Kapron, managing director of financial consultancy Kapronasia and bitcoin-watcher. He explained that this latest effort by the Chinese central bank to restrict the use of the crypto-currency and others effectively means that Chinese speculators won’t be able to get their money off the platforms after 31 January.

Exacerbating the PBoC’s edict was the reinstatement of trading commissions by several Chinese bitcoin exchanges, including the world’s largest bitcoin trading floor by volume, BTC China.
Its website now carries the following statement:
“To stabilize the recent turbulent Bitcoin market and minimize potential market manipulation, BTC China will end the 0 percent trading fee promotion, effective immediately, and revert to the 0.3 percent trading fee. We deeply apologize for the sudden change. BTC China, December 16, 2013.”

A surge in Chinese speculators in the second half of 2013 is widely cited as the main factor behind the vertical ascent of the crypto-currency since September.
We give Jaron Lukasiewicz, CEO of New York-based bitcoin exchange Coinsetter, the last word: “This development will have a negative influence on bitcoin’s near-term price potential, but I would encourage investors to remember that speculation doesn’t drive reliable value in general.”
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