Bitcoin Price Drops $40 Following Reports of New PBOC Warnings

The People's Bank may be getting stricter with Chinese bitcoin exchanges after reported warnings to major banks.

AccessTimeIconApr 25, 2014 at 10:48 a.m. UTC
Updated Sep 14, 2021 at 2:07 p.m. UTC

The People's Bank of China (PBOC) has once again privately warned banks and payment companies to restrict customers' access to bitcoin exchanges, reports indicate.

The news is likely to have affected the international bitcoin price, which dropped by around $40 in the space of a few hours this morning.

CoinDesk sources said that PBOC officials held closed meetings this week with major banks and payment processors to reiterate their desire for all interaction with bitcoin companies to cease.

While there have been no big policy shifts since last December's initial statements, at various stages the PBOC has seemed more determined in its efforts to enforce that policy.

Recently, reports have mainly concerned deposits to bitcoin exchanges from banks and third-party processors, but this week's statements differed in that they involved several of China's major banks, and apparently included warnings to halt withdrawals and conversions from bitcoin to yuan (CNY) accounts as well.

As always, bitcoin exchanges in China say they have heard nothing directly from the PBOC, but are receiving the news via their financial partners.

The timing may be an attempt to curb enthusiasm for digital currencies just before China's Global Bitcoin Summit, due to take place in Beijing from 10-11th May.

Voucher block

News started to seep through today when Alipay, sometimes referred to as 'China's PayPal', issued a statement saying it would no longer support any payments related to bitcoin or litecoin.

Alipay was included in the clampdown on third-party payment companies funding bitcoin exchanges that came into force earlier this year, but today's statement suggests it needed to reaffirm its position.

The exchange's statement said:

"To protect the property rights of the general public, support the renminbi's [yuan] place as the legal fiat currency, prevent money laundering risks: From today onwards, no individual nor entity may use any kind of our company's payment services for bitcoin, litecoin etc.

Transactions for deposits, withdrawals, purchases or sales of related vouchers and other such activities, and cannot use our company's services to transfer any funds related to such transactions. If discovered, our company has the right to immediately terminate such services."

The company then asked for anyone who discovered such activities taking place to report it.

"Related vouchers" is perhaps the most noteworthy phrase in the statement, since Chinese exchanges had been using rechargeable funding codes (or vouchers) to deposit money into their accounts after banking partners limited operations.

Searching on China's Taobao marketplace now produces similarly negative results:

"Due to relevant legal regulations and policies, we cannot display goods related to 'bitcoin'."

Unofficial policy?

In what may or may not be a strategy to discourage bitcoin businesses, authorities in China have alternately issued verbal warnings in closed meetings to various companies that do business with bitcoin exchanges, while publicly denying any attempt to explicitly 'ban bitcoin'.

Exchange Huobi recently halted its voucher payment system, while others, such as BTC China, initially reported their financial partners had heard nothing at all despite a (once again unofficial) 'deadline' for banks to suspend deposits to bitcoin exchanges by 15th April.

CoinDesk is monitoring this developing story, and will update if new information becomes available.

Money and mouse image via Shutterstock


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