The value of a bitcoin was cut in half overnight after BTCChina, the world’s largest bitcoin exchange, said it would no longer accept deposits made in Chinese yuan. The price of the digital currency plummeted on BTC China, as well as Japanese exchange Mt. Gox and U.S.-based exchange Coinbase.
Bitcoins dip below $500
On Mt. Gox, volatility appears to remain within the bitcoin market. As of this writing, the exchange listed the lowest trade of the virtual currency as around $455 and the highest as being around $750. At Coinbase, the current price was listed as around $542. Bitcoins had been trading at over $1,000 each earlier this month.
Last week a European watchdog group warned of the dangers in investing in bitcoins, highlighting the extreme volatility the market has seen. Just a single bit of news like today’s announcement from China is able to send prices soaring sky-high or plummeting to the ground.
China’s bitcoin exchange stops accepting yuan
Overnight (for the Western world anyway), BTC China said it was “temporarily” not accepting deposits made in China’s currency, the yuan. On Tuesday there were reports that the People’s Bank of China met with approximately 10 big payment processors to order them to no longer work with bitcoin exchanges. A spokesperson for BTC did tell Coindesk that although it would no longer accept deposits made in yuan, users could still withdraw yuan from the exchange.
One of the reasons the price of bitcoins has soared recently is because of significant demand in China. As a result, the news from China is an especially big deal for those interested in the digital currency.
U.S. Treasury also cracks down on bitcoin
China isn’t the only nation to crack down on bitcoin-related business. On Tuesday Reuters reported that the U.S. Treasury’s anti-money laundering division reminded businesses related to bitcoins that they could have to start meeting the legal and regulatory requirements which currently affect other money transmitters.
Approximately 12 different companies reportedly received letters from the Financial Crimes Enforcement Network about possible compliance obligations which may affect bitcoin-related businesses. A spokesperson for the advocacy group Bitcoin Foundation told Reuters that the letters were concerning to these businesses because many of them fear sanctions for not complying with such regulations. The letters also requested more details about their business models and notified them of a “gray area” in legality right now. The letters also suggested that the businesses comply with the agency’s rules, just to be on the safe side.
As a result, he said these companies could essentially be “put out of business in an extrajudicial manner. Some are even choosing to suspend their business activities until federal and state regulators decide what to do about bitcoins and businesses which participate in the bitcoin industry.