Bitcoin ATM skirts bank crackdown
BTC China, a leading local digital currency exchange, has installed China’s first bitcoin ATM and launched an online app enabling individuals to buy and sell bitcoins using cellphones, skirting banking regulations seen as increasingly hostile to “crypto-currencies”.
Rising interest from Chinese speculators was credited for driving up global bitcoin prices last year to above $1 000 on some exchanges. But a subsequent crackdown by the People’s Bank of China (PBOC) led to the digital currency sag, changing hands for less than $530 this week, according to exchange-tracker CoinDesk.
That and scandals involving hacking, theft and fraud put pressure on digital currency markets across the world.
Tokyo-based bitcoin exchange Mt - Gox gave up plans to rebuild under bankruptcy protection, and asked a local court to allow it to be liquidated, The Wall Street Journal reported.
Unlike conventional money, bitcoin and other crypto-currencies are generated by computers and are not backed by any central bank, government or physical assets. They can be exchanged through nearly any file transfer mechanism for goods, services or cash — but the latter has proved a problem.
Many regulatory agencies fear that digital currencies can be used easily for money-laundering or the illegal purchase of weapons and drugs, and have moved to control their use.
In December, the PBOC banned financial institutions from trading in bitcoin, saying the government would act to eradicate money-laundering risks from the digital currency.
It did not ban trading by individuals. Last week, two bitcoin exchanges said their trading accounts at certain domestic banks would be closed by the lenders.
BTC China’s chief executive, Bobby Lee, said his exchange was still in operation, and had not yet received any notice from the bank that his accounts were being closed.
While trading volumes were down 80%-90% from their peak, transaction levels were still healthy and on par with levels in September prior to bitcoin’s spike, said Lee.
The new ATM-like services from BTC China do not involve the banking system. The ATM, in a cafe at a mall in Shanghai’s Zhangjiang technology park area, allowed people to buy bitcoin from the exchange for yuan inserted into the machine. Users cannot withdraw cash.
The web app allows transactions on a direct peer-to-peer basis as opposed to selling them on an open exchange. —