China’s Biggest Bitcoin Exchange Unable to Take New Deposits

BTC China, the nation’s largest Bitcoin operator, stopped accepting customer deposits amid a central bank clampdown on use of the digital currency, sending prices plunging as much as 35 percent.

YeePay, a third-party payment provider, gave notice today that it would no longer provide deposit services to the company, Bobby Lee, BTC China’s chief executive officer, said in a phone interview. TenPay, a payment provider owned by Tencent Holdings Ltd., also halted business, Lee said. Bitcoin traded as low as 2,551 yuan ($420) on BTC China from as high as 3,918 yuan before the company announced the suspension on its official microblog.

“We think this is due to government regulation,” he said. “We have to play by the rules of the government of China.”

Lee’s comments came less than two weeks after China’s central bank barred financial institutions and payment companies from handling Bitcoin transactions. The ban reflects concern about the risk the digital currency may pose to China’s capital controls and financial stability after a surge in trading this year made the country the world’s biggest trader of Bitcoin, according to BTC China.

Chinese central bank officials told third-party payment service providers to stop offering clearing services to online Bitcoin exchanges, China Business News reported yesterday. The newspaper is affiliated with the Shanghai government.

Companies currently offering services must end them by the Chinese New Year, a weeklong holiday that begins on Jan. 31, the newspaper cited Zhou Jinhuang, deputy director of payment clearance at the People’s Bank of China, as saying at a meeting with more than 10 third-party payment service providers.

‘More Clarity’

Bitcoin withdrawals are unaffected by today’s announcement, according to BTC China’s microblog.

“We’ve suspended customer deposits,” Lee said. “It is unfortunate but we apologize for that inconvenience.”

People can’t transfer money into BTC China any more, said an YeePay employee who answered the company’s customer service hotline, declining to give her name.

PBOC said on Dec. 5 that financial institutions and payment companies can’t give pricing in Bitcoin, buy and sell the virtual currency or insure Bitcoin-linked products.

“The PBOC statement on Dec. 5 was somewhat vague and there is more clarity now,” Zennon Kapron, managing director of financial consultancy Kapronasia, said in an interview yesterday in Shanghai. “The way it’s reading now is that after the Chinese New Year, you won’t be able to get your money off the platforms.”

Bitcoin Prices

The value of Bitcoin, which is not regulated by any country or banking authority, soared 80-fold from a year ago and traded at $1,000 apiece on Dec. 2 on BitStamp, an Internet-based exchange where Bitcoins are traded for dollars, euros and other currencies. Prices fell to $479.90 at 6:09 p.m.

The currency has rallied on growing interest from investors, while merchants are starting to accept Bitcoins and U.S. officials have told lawmakers such payments could be a legitimate means of exchange. The jump in Bitcoin prices prompted former Federal Reserve Chairman Alan Greenspan this month to call the market a “bubble.”

Speculation that authorities in China may halt trading in Bitcoin surfaced after police arrested three people on suspicion of stealing money from investors through a fake online exchange.

GBL, a Bitcoin trading platform in China that began operating in May and had 4,493 registered users at the end of September, abruptly closed on Oct. 26, the official Xinhua News Agency reported Dec. 3., citing police in eastern Zhejiang privince’s Dongyang city.

— With assistance by Gregory Turk

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