Bit­coin falls on 3rd-party pull­back

China Daily (Hong Kong) - - BUSINESS - By WU YIYAO in Shang­hai wuyiyao@chi­

Bit­coin prices slumped some 26 per­cent on Tues­day fol­low­ing me­dia re­ports that third­party pay­ment com­pa­nies have been banned from do­ing busi­ness with the vir­tual cur­rency ex­changes.

By 3 pm Tues­day, the price of bit­coins had dropped to 3,800 yuan, which was 46 per­cent lower than its all- time high, posted Dec 1.

The Na­tional Busi­ness Daily re­ported Tues­day that lead­ers from third-party pay­ment com­pa­nies con­firmed that the cen­tral bank, the Peo­ple’s Bank of China, had or­dered the com­pa­nies not to do busi­ness with bit­coin ex­changes in China, mean­ing that hold­ers of the vir­tual cur­rency would lack a chan­nel to ex­change their bit­coins for such cur­ren­cies as the Chi­nese yuan or US dol­lar.

Ali­pay, the pay­ment unit of Alibaba Group Hold­ing Ltd, con­firmed to China Daily on Tues­day that it has not sup­ported and will not sup­port bit­coin-based trans­ac­tions.

“We will not in­tro­duce or back bit­coin trans­ac­tions on our of­fi­cial plat­form. But we can ex­er­cise no con­trol on the types of trans­ac­tions be­ing made per­son-to-per­son. So we kindly re­mind all of our users to look into pay­ment se­cu­rity,” Su Hui, pub­lic re­la­tions of­fi­cer of Ali­pay, told China Daily on Tues­day.

Ten­cent Hold­ings Ltd told China Daily on Tues­day that Ten­pay, the com­pany’s in­te­grated pay­ment plat­form, has ended any form of co­op­er­a­tion with com­pa­nies or or­ga­ni­za­tions that en­gage in bit­coin ex­changes.

Zhao Song, a bit­coin holder in Shang­hai, said that own­ers of the vir­tual cur­rency can still with­draw their money from bit­coin ex­changes in China.

“But as ma­jor third- party pay­ment chan­nels are blocked, it is hard to de­posit new funds into my ac­count on th­ese ex­changes,” said Zhao.

Un­der such cir­cum­stances, traders of bit­coins can­not pur­chase any more coins if their funds are run­ning out.

On Dec 5, the PBOC banned banks in China from en­gag­ing in fi­nan­cial trans­ac­tions in Bit­coin but left it up to in­di­vid­u­als to de­cide for them­selves.

“Now the only space for sup­port­ing the dig­i­tal cur­rency may be shut down,” said Zhao.

A source with a ma­jor bit­coin ex­change plat­form in China said the block­ing of third-party pay­ment chan­nels has af­fected bit­coins’ trad­ing vol­ume.

But in­vestors should not panic be­cause they can still sell their hold­ings and with­draw the cur­rency, the source said.

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