19 Dec 2013

Bitcoin crashes after restrictions in China

11:03 am on 19 December 2013

Virtual currency Bitcoin has crashed in China, falling nearly 50% on Wednesday after the country's biggest trading platform banned deposits in yuan.

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Photo: 123RF

The People's Bank of China two weeks ago ordered financial institutions not to provide Bitcoin-related services and products and cautioned against its potential use in money-laundering.

On Wednesday BTC China said it was no longer taking yuan deposits - but withdrawals were still allowed.

Chinese speculators have this year driven Bitcoin prices to a peak of $US1250 at the end of November. By Wednesday night, they stood at $US421, more than 70% down on that peak.

Bitcoin, which was invented after the 2008 global financial crisis, is a form of electronic money. It can be stored either virtually or on a hard drive.

But China keeps a tight grip on the yuan and enforces capital controls, which e-currency threatens by its very nature.