Bitcoin slumps to less than half of Nov value after China bank measures

One of Bitcoin enthusiast Mike Caldwell's coins in this photo illustration at his office in Sandy, Utah, from September 17, 2013. The price of the digital currency bitcoin soared above $1,000 for the first time on Nov 27, 2013, extending a surge this
One of Bitcoin enthusiast Mike Caldwell's coins in this photo illustration at his office in Sandy, Utah, from September 17, 2013. The price of the digital currency bitcoin soared above $1,000 for the first time on Nov 27, 2013, extending a surge this month after a U.S. Senate hearing on virtual currencies. -- PHOTO: REUTERS

SHANGHAI (AFP) - Bitcoins were trading on Wednesday at less than half their value at the end of last month after the Chinese authorities took steps to rein in transactions in virtual currency, which had soared in recent months. Prices on BTCChina, China's biggest Bitcoin trading platform, stood at 3,060 yuan (S$633) each, down almost 60 per cent from their high of 7,588 yuan last month.

Bitcoin, invented in the wake of the global financial crisis, is a form of cryptography-based e-money that offers a largely anonymous payment system. Chinese speculators have poured money into it this year, driving the BTCChina price up 9,122 per cent from Jan 1 to Nov 30 and making China at times the world's biggest Bitcoin market.

But two weeks ago, China's central bank ordered financial institutions not to provide Bitcoin-related services and products and cautioned against its potential use in money-laundering. On Monday, it banned domestic third-party payment companies from providing clearing services for virtual currency trading platforms, according to a report in the China Business News. Citing an unnamed source, it said the instruction was issued at a closed-door meeting.

A notice posted on Wednesday on BTCChina's website to its "valued customers" said: "Due to new government regulations, BTCChina will temporarily suspend CNY (yuan) deposits." It added: "Rest assured that BTCChina will continue to operate normally. We deeply apologise for any inconvenience."

Both BTCChina and another major Chinese exchange, OKCoin, have resumed charging investors transaction fees, according to notices on their respective websites, which said the move was intended to prevent speculation and price manipulation.