China bars banks from handling bitcoins

Published on NewsOK Modified: December 5, 2013 at 9:51 am •  Published: December 5, 2013
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BEIJING (AP) — Bitcoins suffered a new setback after China's central bank said Thursday its banks and payment systems are barred from handling the virtual currency.

The central bank said bitcoins did not qualify as a currency but private individuals still are allowed to trade them at their own risk.

Bitcoins are created, distributed, and authenticated independently of any bank or government. Their relative anonymity holds out the promise of being able to spend money across the Internet without scrutiny.

"Bitcoins are virtual goods that have no legal status or monetary equivalent and should not be used as currency," said a Chinese central bank statement.

It said financial institutions and payment systems were not allowed use bitcoin prices for products and could not sell, trade or store bitcoins.

"Ordinary people are free to participate in transactions at their own risk," the central bank said.

Despite wild swings in value, the virtual currency has been moving toward broader acceptance. A growing number of companies accept bitcoins, which can be converted into cash.

Last month, the biggest private university in Cyprus said it would accept bitcoins for tuition.

But other governments are wary of the cybercurrency. In July, Thailand's central bank banned trading and use of bitcoins.