China’s largest bank bars Bitcoin trading

SHANGHAI: Chinas biggest bank ICBC has banned activities related to trading in Bitcoin, joining at least 10 other Chinese banks participating in a government crackdown on virtual currencies.

Bitcoin, invented in the wake of the global financial crisis by a mysterious computer guru, is a form of cryptography-based e-money that can be stored either virtually or on a users hard drive, and offers a largely anonymous payment system.

Speculators drove Chinas Bitcoin prices into the financial stratosphere last year, peaking at 7,588.88 yuan (now US$1,224) in November, before they crashed following moves by exchanges, financial institutions and the government to rein in the virtual currency.

From this date, any institution or individual must not use accounts set up with our bank for the deposit and withdrawal and transfer of funds for Bitcoin and Litecoin trading, the Industrial and Commercial Bank of China (ICBC) said in a statement.

Litecoin is another virtual currency

The move aimed to protect the property rights and interests of the public, prevent money laundering risks as well as to safeguard the status of the renminbi as the legal currency, ICBC said, referring to Chinas yuan currency.

China tightly controls the yuan and enforces capital controls, which e-currencies threaten by their very nature.

ICBC threatened to suspend and close bank accounts if clients failed to comply with the new rules.

In its annual financial stability report released late last month, Chinas central bank labelled Bitcoin a tool for speculation and warned against risks the e-money could pose to capital flows as well as its possible use in illegal activities including drug dealing and money laundering.

Last month, the central Peoples Bank of China instructed banks and third-party payment providers to completely cut off the capital chain for Bitcoin trading, the Southern Metropolis Daily newspaper reported.

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China’s largest bank bars Bitcoin trading