China's largest bitcoin exchange forced to stop accepting deposits

China has been clamping down on the currency, and has banned banks from trading with it

China's recent clampdown on Bitcoin appears to be forcing the nation's largest exchange to stop accepting deposits, dealing a major blow to the virtual currency in the nation.

The exchange, BTC China, said on Wednesday it could no longer take deposits in Chinese yuan. On the same day, the exchange's third-party payment service notified BTC China that it would stop accepting its customers' deposits.

BTC China's CEO Bobby Lee said he's not been offered an explanation for the service stoppage. However, he pointed to recent Chinese news reports saying local regulators had demanded local third-party payment processors refrain from offering services to Bitcoin exchanges.

"I suspect the rumors are true," he said. "They were told not to do business with us."

Earlier this month, Chinese authorities said they would ban banks from trading in the virtual currency. Regulators point to problems with the volatile price of bitcoins, and how scams have been committed using the cryptocurrency.

The clampdown has sent bitcoin prices plummeting. On Wednesday, BTC China said the virtual currency was trading at 2580 yuan (US$422) per coin, down from 5293 yuan on Monday.

BTC China customers will still be able to make withdrawals, and trade in bitcoins using any Chinese yuan already deposited on the exchange. But the lack of a third-party service prevents new cash from coming into the exchange.

YeePay, BTC China's third-party payment service, declined to comment.

BTC China is looking for new options to allow customers to make deposits. But because the company is geared for China, the exchange is only looking to allow exchanges in the Chinese yuan, Lee said.

Before the clampdown, China had emerged as market where bitcoins were becoming popular as a form of investment. A few tech vendors were even trading in the currency, but have now stopped, citing China's recent move to regulate bitcoins.

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Tags governmentregulationinternetInternet-based applications and servicesBTC ChinaYeePay

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Michael Kan

IDG News Service
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