Did The Chinese Government Just Admit Bitcoin Poses A Risk For The Financial System?Submitted by Rafael 111 on Sat, 12/07/2013 - 13:52
Overnight Wednesday-Thursday in North America the bitcoin price dropped as the People's Bank of China announced banks cannot offer bitcoin services and btcchina.com , leading bitcoin exchange, went down.
Overall, the announcement was akin to the announcements by FinTrac and FinCen out of Canada and the US, respectively. Essentially, advising bitcoin exchanges to know their customers, the People's Bank of China moved to protect the yuan and assure state banks did not get involved in bitcoin because it could possibly, in the future, pose a risk to the financial system.
The announcement follows a near 90-fold increase in the virtual currency's value since it was created in 2009. Bitcoin dipped to the $800 range after the announcement, but climbed back above $1,000. After having appreciated in price from $125 to more than $1,200 in the matter of the past few months, the crash that everyone has been waiting for is underway with Bitcoin prices dipping to under $650 and currently around $750.
The statement in China warned that crypto-currencies like Bitcoin pose risks to the Chinese financial system. The central bank stated it would outlaw financial and payment institutions from using Bitcoin, including buying and selling or insuring bitcoin-linked products.
According to the document, individuals were free to use bitcoins and private exchanges had to follow know-your-customer and anti-money laundering protocol.
Now the world's largest bitcoin exchange, after passing Mt. Gox, BTC China transmitted 500,000 bitcoins last week; 30% of the market share. This before the site went down overnight Wednesday-Thursday.
Of What is the Bitcoin Price Made?