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China restricts bitcoin viability of the controversial digital
currency.
– for now On Dec. 5, 2013, the PBC, along

with China's other bank regulatory
agencies, issued a blanket statement
hina's central bank notified the organizations comprising the country's to the country's financial and
banking infrastructure that they are not allowed to deal in bitcoin. The payment institutions that they cannot
People's Bank of China said it made the declaration to protect China have any association with Bitcoin,
C from the risks associated with the volatile alternative virtual currency either to buy or sell it, or in any way
and its money laundering potential. But t he move may be a precursor to China establish processes for exchanging,
eventually regulating bitcoin, a development that would confirm the long-term underwriting or saving it.

In a statement, PBC said it made
the decision "to protect the public's
property rights, to protect RMB's
official currency status, to prevent
money laundering risk and to
protect financial stability…" The
RMB (renminbi) is China's official
currency.

PBC said bitcoin is "not currency in
the true sense. Bitcoin is a specified
virtual commodity, it does not have
equal legal status with currency, and
it cannot and should not be circulated
as currency on the market." The bank
noted that no financial institution
issues bitcoin, no central authority
regulates it and that it is exchanged
anonymously, which makes it a
prime money laundering tool.

After the PBC made the announce-
ment, the value of bitcoin on the
open market subsequently dropped
as much as 30 percent, from a high of
over $1,200 per bitcoin unit.

Good news for bitcoin
Tom Waters, Director of Sales at
Bank Associates Merchant Services,
believes that the PBC's notice is a
first step in the eventual regulation
of bitcoin in the East Asian economic
powerhouse. "This notice is actually
pretty good news for bitcoin," he
told The Green Sheet. "It suggests
that China is open to the technology
and is preparing for its widespread
adoption by taking precautionary
measures."

Waters noted that the PBC is
not shutting down the bitcoin
marketplace in China, where the
practice is increasing in popularity
and where the largest bitcoin
exchange by volume, Shanghai-
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