IT Pro is supported by its audience. When you purchase through links on our site, we may earn an affiliate commission. Learn more

Bitcoin value tumbles after Chinese bank ban

Chinese bank bans Bitcoin-based transactions on security grounds.

Banned

Chinese banks have been banned from handling Bitcoin transactions, prompting the value of the virtual currency to crash.

The ban was issued by the People's Bank of China. In a statement, the financial institution said the move was made to "protect the legal status of the yuan currency" and to "prevent money laundering risks and maintain financial stability".

The notice also states that Bitcoin "does not have legal status" and "cannot and should not be used as currency", before explaining the ban was imposed as the virtual currency does not have the backing of any nation or central authority.

Ordinary members of the public were free to trade in Bitcoins, the organisation said, but should be aware of the risks involved in trading in the virtual currency.

The move has sent the value of Bitcoins crashing, after the virtual currency soared in value over the preceding months. At the end of November the value of one Bitcoin peaked at over $1,000 for the first time.

However, the central bank said the virtual currency was being used by criminals and terrorists, hence the need to clampdown on Bitcoin transactions.

"[They] can be done anonymously and are not restricted by location, it's difficult to monitor capital flows and it therefore facilitates money laundering and financing for terrorist activities," the People's Bank of China said.

"There have been criminal activities using Bitcoins, such as trading of drugs and guns," the bank said. "Relevant cases are under investigation."

The transaction ban comes after comments made by the former head of the Dutch Central Bank, Nout Wellink, who compared the  hype around Bitcoin to the country's Tulip mania in the 17th century.

"At least then you got a tulip [at the end], now you get nothing," he told Dutch publication Z24.

Featured Resources

The state of Salesforce: Future of business

Three articles that look forward into the changing state of Salesforce and the future of business

Free Download

The mighty struggle to migrate SAP to the cloud may be over

A simplified and unified approach to delivering Enterprise Transformation in the cloud

Free Download

The business value of the transformative mainframe

Modernising on the mainframe

Free Download

The Total Economic Impact™ Of IBM FlashSystem

Cost savings and business benefits enabled by FlashSystem

Free Download

Recommended

Surging inflation is driving people to cryptocurrencies
cryptocurrencies

Surging inflation is driving people to cryptocurrencies

11 Aug 2022
What is cryptocurrency mining?
cryptocurrencies

What is cryptocurrency mining?

27 May 2022
IMF urges El Salvador to remove Bitcoin as legal tender
cryptocurrencies

IMF urges El Salvador to remove Bitcoin as legal tender

26 Jan 2022
El Salvador announces plans to build a 'Bitcoin city' at the foot of a volcano
cryptocurrencies

El Salvador announces plans to build a 'Bitcoin city' at the foot of a volcano

22 Nov 2021

Most Popular

Cyber attack on software supplier causes "major outage" across the NHS
cyber attacks

Cyber attack on software supplier causes "major outage" across the NHS

8 Aug 2022
Why convenience is the biggest threat to your security
Sponsored

Why convenience is the biggest threat to your security

8 Aug 2022
How to boot Windows 11 in Safe Mode
Microsoft Windows

How to boot Windows 11 in Safe Mode

29 Jul 2022