China's Next Anti-Bitcoin Move Targets Payment Processors

China's Next Anti-Bitcoin Move Eyes Payment Processors  China is reportedly taking further action against bitcoins by cracking down on third-party payment processors that feed real money in and out of the cryptocurrency’s exchanges.
The reports alone, without official confirmation out of China, have spurred a selling spree among traders of bitcoin and other virtual currencies, including litecoin.
As of 1 a.m. Tuesday EST, bitcoin was hovering just above $700 on Mt. Gox. On other exchanges, including Bitstamp and BTC-e, bitcoin nearly hit $600 before bouncing back closer to $700.
Bitcoin prices on the yuan-traded BTC China exchange were down 34 percent on the news that surfaced earlier Monday.
At first, Coindesk.com reported that the People’s Bank of China had issued a new ban on third-party payment processors from doing business with bitcoin exchanges.
Business Insider later in the evening confirmed the report via Bill Bishop, the editor of the Sinocism newsletter and a New York Times contributor.
China is “now cracking down harder” on bitcoin and most other digital currencies, including litecoin, Bishop tweeted.
“PBOC does not like it, does not want it to become another speculative bubble here. Tough to fight the PBOC,” Bishop wrote.
The latest ban follows the People’s Bank of China’s ruling on Dec. 5 prohibiting financial institutions from taking part in bitcoin transactions. That announcement sparked a roughly 30 percent sell-off before bitcoin regained its footing in the $800-$900 range.
Why would China’s actions cause such a global sell-off in bitcoins? It was Chinese demand for bitcoin that helped the virtual currency’s price more than triple over the past several weeks. Before the Dec. 5 ban, the country’s largest exchange, BTC China, accounted for more than one-third of volume world-wide, up from about 20 percent over the previous six months.
China likes to keep a tight grip on its currency, the yuan, a practice which raised doubts that the nation would stand idly by as the virtual currency, which can be easily transferred via the Internet and converted, gained more prominence.

One thought on “China's Next Anti-Bitcoin Move Targets Payment Processors

  • December 17, 2013 at 1:26 am
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    When the petrodollar collapses the price and market cap will increase again… plenty more turbulence ahead in this volatile market.

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