Chinese central bank: bitcoin is not legal currency
Mon 9 Jan 2017
The People’s Bank of China has issued a statement designating bitcoin currency as as virtual goods, and stating that it does not have the same legal status as currency – and should not be used as money in the marketplace.
The Bank also warned that individuals and institutions that invest in bitcoin should do so carefully, and bear the responsibilities and risks of those decisions.
Some credit the Chinese government’s statement regarding bitcoin as a factor the price drop that occurred immediately after, with bitcoin values dropping up to 21% worldwide. The value of the cryptocurrency surged at the end of last year and the first few days of 2017, reaching a high of over $1100 USD. Immediately following the Chinese central bank’s announcement, the value of bitcoin fell to $832, although it has now recovered to $902.
The statement was issued after Bank representatives met with members of the country’s leading bitcoin exchanges, including BTCC, Huobi, and OKCoin. At the meeting, the bank requested that the exchanges comply with China’s regulations and policies for currency exchange.
Bobby Lee, co-founder and CEO of BTCC, commented on Twitter that he regularly meets with the People’s Bank of China, in order to ensure that BTCC is compliant with all regulatory guidelines and requirements. He also interpreted the Bank’s statement as a straightforward reminder to investors that bitcoin markets are volatile, and that the government bears no risk or responsibility to those who choose to invest their money in virtual currencies.
This statement from the government comes at a time when interest in bitcoin is peaking around the world. Factors such as economic uncertainty, for example in Mexico and South Korea, have increased consumer interest in virtual currencies through the last few months and driven the price of bitcoin to record highs. Governmental policies, such as the decision in India to remove certain bills from circulation, have contributed to Bitcoin’s recent surge as well.
In China, interest in the cryptocurrency was heightened as the government decided to tighten currency controls with the approach of the Chinese New Year.
While the eventual decision to ban bitcoin in China has been described by some as ‘inevitable’, following Russia’s lead to ban all cryptocurrency, potential investors are reminded that as a decentralized virtual currency bitcoin may be impossible to truly ban anywhere.
The People’s Bank of China is the central bank for the country, and has the power to set monetary guidelines and regulations for the nation.