Bitcoin Exchange BTC China Cuts Ties With China Merchants Bank

By Dow Jones Business News, April 28, 2014, 05:05:00 AM EDT

By Chao Deng

SHANGHAI--Chinese bitcoin exchange BTC China is no longer accepting customer deposits in yuan from one of the country's largest banks, China Merchants Bank Co.

The move by the exchange, which had been the largest bitcoin dealer in the world for a brief period last year, is the latest indication of the Chinese central bank's clampdown on trading of the virtual currency.

China Merchants Bank told BTC China to cancel accounts with it, according to a posting by the exchange on its official account with the microblogging site Sina Weibo on Monday.

Last week, China Merchants Bank said it would stop servicing bitcoin-related transactions--the first statement by a major Chinese bank to address bitcoin. The reason behind the move was to "protect public interests, safeguard the legal status of the yuan to prevent money laundering," according to the statement on the lender's website Friday.

The People's Bank of China issued a statement in December banning financial institutions in China from dealing with bitcoin. Since then, the central bank hasn't disclosed further details about its stance, but bitcoin exchanges here have begun to end deposits in yuan after what has been reported to be a behind-the-scenes order from the central bank for payment companies and banks to close bitcoin trading accounts.

Two small bitcoin exchanges, Shenzhen-based BTC 38 and Shanghai-based FX BTC, stopped customer deposits in yuan earlier this month.

Shanghai-based BTC China was resistant to making adjustments, saying it hadn't received any notice from the banks they work with until now. The exchange is continuing to accept yuan deposits from other banks, as well as continuing to accept deposits in bitcoin, according to firm spokesman Kenneth Ling.

The price of one bitcoin was at $422.66 Monday afternoon, down roughly 15% from before China Merchants Bank issued its statement Friday.

Originally posted here:

Bitcoin Exchange BTC China Cuts Ties With China Merchants Bank