China moved to ban financial institutions from handling bitcoin transactions on December 5, following the currency’s unstable changes in value in recent months, Bloomberg reported.
China said that bitcoin is not a currency with “real meaning,” and as such, it is not entitled to the legal status of other currencies. However, China did indicate that consumers are free to participate in bitcoin transactions, should they choose to.
“The concern is that it interferes with normal monetary policy operation,” Hao Hong, head of China research at Hong Kong’s Bocom International Holdings, said, according to the source. “It represents an unofficial leakage to the current monetary system and trades globally. It is difficult to regulate and could be used for money laundering.”
Bitcoin fell to a low of $870 per BTC on the news, down from a high of $1,240 on popular Japan-based exchange Mt. Gox. At press time, the currency was valued at $986 on the exchange.
For more on how global regulators could react to bitcoin, read PYMNTS Contributor David Evans’ analysis here.
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