Bitcoin Prices Plunge on Report PBOC Orders Accounts Shut

Bitcoin prices plunged almost 10 percent today after a report that China’s central bank ordered banks and payment companies to close the trading accounts of more than 10 exchanges.

Accounts must be shut by April 15, preventing investors in the commodity that advocates promote as a digital currency from doing fund transfers to the exchanges, according to a Caixin news report citing a notice sent to banks and third-party payment companies this month.

“I’m aware of the rumors circulating on the topic,” Bobby Lee, chief executive officer of BTC China, one of the largest bitcoin exchanges in the Asian nation, said by phone today. “I haven’t heard of anything else to confirm that. We are still waiting to see what happens.”

The price of bitcoin was off 9.38 percent at $524.77 at 12:06 New York time, according to the CoinDesk Bitcoin Price Index.

The restrictions would be the latest on the commodity from the People’s Bank of China, which has sought to limit dealings that may be used to launder money or evade capital controls. The central bank issued a notice on Dec. 5 barring financial institutions and payment companies from buying and selling bitcoin or dealing in linked products.

The Chinese monetary authority didn’t respond to a faxed inquiry about today’s report. In a March 21 statement on its microblog, the PBOC denied unspecified media reports that it had banned bitcoin trading.

Hard Hit

Bitcoin has been hard hit since Tokyo-based exchange Mt. Gox, once the world’s largest, halted withdrawals on Feb. 7, sending prices tumbling more than 8 percent. The exchange filed for bankruptcy weeks later after about $470 million in bitcoins belonging to its customers and the firm disappeared from its registries.

Prices dived by about 36 percent from its intraday high immediately after the PBOC notice on Dec. 5. BTC’s Lee said at the time he was in favor of government regulation of the bitcoin exchanges as it would benefit consumers. BTC China announced two weeks later that it stopped accepting deposits, triggering another price drop.

Sheng Songcheng, head of the PBOC’s statistics department, said at a briefing on Jan. 15 that people needed to be reminded of the risks of dealing in the “virtual commodity” that wasn’t “fundamentally a currency.”