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January 8, 2014 9:08 am
The Asian country still dominates the world’s trading of Bitcoin, but the government’s tough stance has made it difficult for people in China holding the virtual currency to buy anything with it.
On Alibaba’s Taobao, China’s biggest online shopping platform, Bitcoin had carved out a niche in spite of the fact that Alibaba itself refused to accept or support Bitcoin payments.
Dozens of individual merchants had said they would accept Bitcoin as payment for products including facial creams, tea cups, jeans and crabs. Some merchants were using Taobao to sell Bitcoins, while others were offering the specially designed computer chips needed to “mine” the virtual currency.
Now all those business ventures will have to come to a halt. Alibaba said that as of January 14 it would stop its users from doing any deals in Bitcoins or other virtual currencies such as Litecoins, and would bar merchants from selling any Bitcoin mining software or offering any related products.
The decision was taken to “promote the healthy development of Taobao Marketplace and to more effectively protect the interests of Taobao members”, Alibaba said in a statement. It added that the ban stemmed from the central bank’s ruling in December that prohibits any payment companies or financial institutions from handling Bitcoins.
China has said that individuals are free to buy and sell Bitcoin at their own risk, but beyond that it has taken a hard line.
“Although there are people calling it a ‘currency’, it is not issued by the monetary authority, it does not possess the attributes of a currency such as legal repayment and enforcement abilities,” the People’s Bank of China said in a statement in December.
“Judged by its nature, Bitcoin is one particular kind of a virtual product. It does not have the legal status of a currency, and it cannot and moreover should not be allowed to circulate in the market as a currency.”
Although the curbs put in place by the central bank were widely expected to spell the end for Bitcoin in China, the virtual currency has proved resilient as trading exchanges develop solutions that allow people to continue buying Bitcoins.
The two leading Chinese exchanges – Huobi and BTC China – accounted for more than 60 per cent of global transactions in Bitcoins over the past seven days, according to Bitcoinity, a website that tracks the virtual currency’s usage.
From Malaysia to Germany, regulators have warned about the dangers of Bitcoin after its value soared nearly 100-fold. But the virtual currency has also started to gain acceptance in some quarters. This week Zynga, the online games company, said it would begin a pilot programme to accept Bitcoins.
Bitcoin has been on a roller-coaster ride, soaring to more than $1,000 a unit in late November before losing nearly half its value in December and then climbing back to the $1,000 mark this week.
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