Fresh Setback for Bitcoin as Alibaba Applies Ban

Virtual currency Bitcoin has suffered a further setback as China’s internet retail giant Alibaba said it would impose a ban on its use.

Taobao, Alibaba’s online shopping platform and China’s equivalent of Amazon, was ordered to shut down Bitcoin trading by the People’s Bank of China (PBOC), the country’s central bank, after a growing number of merchants began to accept the digital currency.

“The central bank clearly has required third-party payment services to close Bitcoin…trading channels,” Taobao said. Bitcoin had successfully established a presence on the country’s biggest online shopping site, even though Alibaba itself refused to accept or support Bitcoin payments.

The decision to enforce the ban was taken to “promote the healthy development of Taobao Marketplace and to more effectively protect the interests of Taobao members”, a statement from Alibaba read. As of January 14 it would stop its users from doing any deals in Bitcoins or other virtual currencies such as Litecoins and would bar merchants from selling Bitcoin mining software or offering any related products.

It added that the ban stemmed from
last month’s PBOC ruling
that prohibits any payment companies or financial institutions from handling Bitcoins. BTC China, the country’s biggest Bitcoin exchange, was forced to stop taking deposits following the PBOC ruling.

Expectations that the PBOC’s action would lead to the rapid demise of Bitcoin in China have proved premature however. The virtual currency demonstrated resilience as trading exchanges developed solutions that enable people to continue buying Bitcoins.

Many of China’s wealthiest citizens are believed to have used Bitcoin to circumvent the country’s strict capital controls, threatening to undermine government attempts to control the renminbi (RMB).

The history of Bitcoin to date has been chequered, with
the Reserve Bank of India (RBI) recently following the PBOC’s lead
and forcing Indian’s exchanges for the currency to suspend operations.

1 views

Related reading

hanjin-shipping
donald-trump
job
New consumer banking head for Citi Asia Pacific