BTC China Suspends Chinese Merchants Bank Deposits

BTC China, the largest Bitcoin exchange inthe country, has halted local-currency deposits to clients’ China MerchantsBank Co. accounts. The move comes amid the People’s Bank of China’s crackdownon trading in digital currency.

The announcement was made on BTC China’s Weibo page (Weibo is a Chinese socialnetwork) and explains that the move aims to protect the security of clients’funds and safeguard stable operations. Merchants Bank banned the use ofaccounts making Bitcoin transactions, including vouchers and recharge codes, accordingto an officialstatement dated April 25.

Bobby Lee, CEO of BTC China, said“We saw the bank’s statement and took the initiative,” although clients can useaccounts through other lenders thus not effecting exchange’s operations.

The vouchers, or deposit codes, were a wayBTC exchanges could skirt previous bans implemented by the People’s Bank ofChina (PBOC). They were directly addressed by a PBOC official who looks toclose that loophole:

“The current level of services that banks andthird-party payment processors provide counts as directly providing services toBitcoin related companies. Online stores and public marketplaces that sell ortrade ‘deposit codes’ from Bitcoin exchanges counts as indirectly providingservices to Bitcoin related companies.”

As of the writing of this article (April28) the price of Bitcoin has plunged severely to below $430. About 10% of Bitcointrades around the world are represented by the Chinese yuan, which is thesecond-most used currency in Bitcoin trade behind the US dollar. 

In December 2013 the PBOC banned financialinstitutions from dealing in digital currency. Even last week Lee claimed hehad received no formal notice about an April15 deadline given by the PBOC demanding any Bitcoin exchanges to closetheir accounts.

We will keep you updated on the matter asit unfolds.