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Saturday, April 26, 2014
Bitcoin news April 26 , 2014 -- China's cat and mouse game concerning bitcoin continues ----- The People’s Bank of China (PBOC) has once again privately warnedbanks and payment companies to restrict customers’ access to bitcoin exchanges, reports indicate. The news is likely to have affected the international bitcoin price, which dropped by around $40 in the space of a few hours this morning.
The People’s Bank of China (PBOC) has once again privately warnedbanks and payment companies to restrict customers’ access to bitcoin exchanges, reports indicate.
The news is likely to have affected the international bitcoin price, which dropped by around $40 in the space of a few hours this morning.
CoinDesk sources said that PBOC officials held closed meetings this week with major banks and payment processors to reiterate their desire for all interaction with bitcoin companies to cease.
While there have been no big policy shifts since last December’s initial statements, at various stages the PBOC has seemed more determined in its efforts to enforce that policy.
Recently, reports have mainly concerned deposits to bitcoin exchanges from banks and third-party processors, but this week’s statements differed in that they involved several of China’s major banks, and apparently included warnings to halt withdrawals and conversions from bitcoin to yuan (CNY) accounts as well.
As always, bitcoin exchanges in China say they have heard nothing directly from the PBOC, but are receiving the news via their financial partners.
The timing may be an attempt to curb enthusiasm for digital currencies just before China’s Global Bitcoin Summit, due to take place in Beijing from 10-11th May.
News started to seep through today when Alipay, sometimes referred to as ‘China’s PayPal’, issued a statement saying it would no longer support any payments related to bitcoin or litecoin.
Alipay was included in the clampdown on third-party payment companies funding bitcoin exchanges that came into force earlier this year, but today’s statement suggests it needed to reaffirm its position.
The exchange’s statement said:
“To protect the property rights of the general public, support the renminbi’s [yuan] place as the legal fiat currency, prevent money laundering risks: From today onwards, no individual nor entity may use any kind of our company’s payment services for bitcoin, litecoin etc.
Transactions for deposits, withdrawals, purchases or sales of related vouchers and other such activities, and cannot use our company’s services to transfer any funds related to such transactions. If discovered, our company has the right to immediately terminate such services.”
The company then asked for anyone who discovered such activities taking place to report it.
“Related vouchers” is perhaps the most noteworthy phrase in the statement, since Chinese exchanges had been using rechargeable funding codes (or vouchers) to deposit money into their accounts after banking partners limited operations.
Searching on China’s Taobao marketplace now produces similarly negative results:
“Due to relevant legal regulations and policies, we cannot display goods related to ‘bitcoin’.”
In what may or may not be a strategy to discourage bitcoin businesses, authorities in China have alternately issued verbal warnings in closed meetings to various companies that do business with bitcoin exchanges, while publicly denying any attempt to explicitly ‘ban bitcoin’.
Exchange Huobi recently halted its voucher payment system, while others, such as BTC China, initially reported their financial partners had heard nothing at all despite a (once again unofficial) ‘deadline’ for banks to suspend deposits to bitcoin exchanges by 15th April.
CoinDesk is monitoring this developing story, and will update if new information becomes available.
The French Ministry of Economy and Finance has said that, while bitcoin is not officially recognized by the state, revenues generated from digital currency transactions are subject to taxation.
However, under French law, there exists a certain margin of tolerance for minor and irregular revenues for those who do not make their living from bitcoin trading, according to the ministry.
“For the time being, there is no declarative obligation in what concerns bitcoin,” a spokesperson for the French ministry told local daily Le Monde, explaining:
“All taxpayers are required to declare all their revenues, including those originating from abroad. This said, there is a certain tolerance [from the state authorities] regarding minor and irregular revenues, for instance from occasional sales.”
Disputed legal status of bitcoin
The unclear legal status of bitcoin in France makes imposing taxes on bitcoin-related revenues wired to personal bank accounts a controversial issue, according to the French Banking Federation (Fédération bancaire française or FBF):
“The declaration is not related to bitcoin, which is not illegal. If your response does not allow [the tax authorities] to understand the operation, the bank could be forced to file a declaration to [the French anti-money laundering office] Tracfin accordingly with the law.”
In addition to this, the bank could also ask its clients whether bitcoin trading is their main professional activity, said the FBF.
The statement by the Ministry of Economy and Finance comes as a confirmation of the stance presented by the Bank of France in a paper published in December 2013.
In it the bank said:
“Bitcoin cannot be considered as a currency, given that it is possible to refuse payment made in bitcoin without violating article R642-3 of the [French] Penal Code which sanctions refusal of banknotes and coins denominated in the euro.”
As previously reported, in late 2013, French central bankers joined their many international counterparts in issuing a warning against the risks of bitcoin trading. The bank warned that the price of bitcoin is inherently volatile, and that cryptocurrency users could have difficulties with converting their bitcoins into real money.
Moreover, the bank said that, under French law, bitcoin cannot be considered as a legal currency in line with the country’s monetary and financial code.
While the document recognizes electronic currency, it also specifies that all currency has to be fitted with a legal guarantee of reimbursement at its nominal value.
Detail from “Free Lunch,” by David Kim (click for full image).
Welcome to BitBeat, your daily dose of crypto-current events, written by Paul Vigna and Michael J. Casey.
Bitcoin Latest Price: $460.89, down 7.9% (viaCoinDesk)
Crossing Our Desk:
- Beijing still seems to matter for the price of bitcoin. Given that Chinese trading in the digital currency has dried up considerably since the government first started cracking down on banks’ interactions with bitcoin businesses in December, you’d think the market’s capacity to be surprised might have similarly dried up.
But here we are, once again, with reports of some negative statements by officials at the People’s Bank of China and bitcoin’s international price is down sharply. Specifically, today’s $40 drop is being attributed a report in Caixin Online that central bank officials had held meetings with various commercial banks and reiterated their concerns about banks providing services to bitcoin businesses.
The report said that during the closed-door meetings, the officials “specifically criticized various commercial banks for continuing to do business with BTC China,” the country’s largest bitcoin exchange.
The PBOC had earlier set an April 15 deadline for banks to cut off bitcoin firms’ accounts, a development that weighed heavily on bitcoin’s price and caused a further drop in trading in China. But BTC China CEO Bobby Lee said he never received notification from his bankers and so continued to operate after that date. He wasn’t available this afternoon (New York time) for comment.
Friday’s report comes just two weeks before the Global Bitcoin Summit in Beijing, which organizers are billing as the “first global bitcoin conference in China.” It will feature prominent bitcoin personalities such as entrepreneur Roger Ver and journalist and Ethereum founder Vitalik Buterin. (Michael Casey)
- When you think about what bitcoin is literally, there’s not much there. Just strings of computer code. That’s it, really. But when you think about what bitcoin is figuratively, it becomes something else completely.
The cryptocurrency keeps being a subject of interest to the arts community. The latest example of that was a one-night show on Thursday called “Proof of Work” at a The Sub gallery in the mission district of San Francisco, which called upon artists to explore the connections between digital technologies and the human condition.
The piece that most directly speaks to the bitcoin Zeitgeist was “Free Lunch” by Oakland artist David Kim, pictured above, a multimedia piece that he completed just in time for the show. It shows Dorian Nakamoto – the man named by Newsweek in March as the creator of bitcoin – as he attempts to evade the media during the frenzy after the story broke.
Mr. Kim initially named the piece “Evasive Maneuvers,” but was convinced to change it by somebody at the show who suggested “Free Lunch.” (The title refers to something Nakamoto said.) Mr. Kim wasn’t a bitcoiner before this; he said he’d heard of bitcoin only in the popular culture, but began doing more research when he was asked to be in the show. From his research, he thought the story of Dorian Nakamoto was the most intriguing.
“I sat there for hours, digging into the whole situation,” he said. “That’s when I was inspired to do the image of Dorian.”
The piece is for sale, Mr. Kim said. (Paul Vigna)
Crypto Coin News.....
Caixin Article Claims PBOC Is Meeting With Banks And Payment Processors To Completely Cut Off Funding To Bitcoin Trading
Caixin is a respected Chinese financial news source
Bitcoin prices have dropped nearly 10% across all Bitcoin exchanges, with the bulk of the action understandably located on Chinese Bitcoin Exchanges. A few hours ago, Caixin published a Chinese article claiming that the PBOC has met with commercial banks and third party payment processors, in particular those that do, or have done, business with Chinese Bitcoin Exchanges to remind them of the PBOC’s stance. This Caixin article is written by a different author than the last Caixin article that was commented on in Western media (which broke the news of the March PBOC Notice). The PBOC is cracking down on the adaptive funding methods that Chinese Bitcoin Exchanges have come up with, and is even moving to stop cash withdrawals. However, they still are not enforcing anything for individuals nor merchants.
Upon running the article through Google Translate, some Redditors discovered a line that was incorrectly translated as saying the PBOC desired to “ban all transactions.” Needless to say, again,this is simply not the case. The PBOC is, however, taking a much more hard-line approach to the pressing issue of capital flight from RMB to BTC to Satoshi knows what: They wish to “completely cut off the funding line into Bitcoin trading.” The PBOC is talking with both compliant and non-compliant banks, Chinese Bitcoin Exchanges, and third party payment processors in meetings overseen by the Payment and Clearing Organization of China, hopefully there will be meaningful two-way dialogue that may soften the PBOC’s stance.
Many Chinese Bitcoin onlookers have been perplexed by the silence of the PBOC following all the hubbub earlier in April concerning the now-long-gone 4/15/14 deadline for commercial banks and 3rd party payment processors in China to stop doing business with Chinese Bitcoin trading platforms. Chinese Bitcoin Exchanges have been adapting over the last few weeks as many had their bank accounts closed. The government forced anti-Bitcoin moves of most of China’s major banks have forced Chinese Bitcoin Exchanges to turn to unconventional methods for funding, such as ATMs. Some Chinese Bitcoin Exchanges plan on taking their funding methods, and even their websites, overseas to more favorable regulatory environments.
In the morning of April 24, PBOC met with some commercial banks and 3rd party payment processors to discuss the next step in bitcoin risk prevention, hoping to completely cut off the funding line into Bitcoin trading.
On 4/22, the Central Bank, through the Payment and Clearing Organization of China, initiated this meeting. Interviewees include all commercial banks and 3rd party payment processors related to Bitcoin, with the total number of participants no less than 20. These include various large commercial banks, Paypal, Tenpay and other large scale payment processors which includes Huobi.com’s recharge code provider, EPRO payments.
The meeting is chaired by the Central Bank Department of Treaty and Law Director Mu Huaipeng, other participants include Secretary Lai Yue as well as other PBOC officials, all of who have higher standards than ever before.
Central bankers have stated that this meeting is focused on Bitcoin’s significant price rebound after 4/15, which led to an awkward situation as accounts were not cleared to expectations.
It was in March that the PBOC issued the 《Notice on Further Strengthening Bitcoin Risk Prevention Measures》, that emphasized that commercial banks and 3rd party payments processors were not to perform services for Bitcoin trading，establishing 4/15/14 as a deadline. However，come 4/15，many Bitcoin trading platforms were still functioning; Bitcoin’s exchange rate also soared from 2,500 Yuan to 3,000 Yuan.
The “Notice on Further Strengthening Bitcoin Risk Prevention Measures” still hasn’t been seen by Bitcoiners, but there is no doubt that it exists. It will be interesting to see the end result of these PBOC meetings. Will we have a slew of Chinese Bitcoin Exchanges announce the simultaneous end to one funding method and the rise of another? When will the Chinese government, and all governments for that matter, realize that they can’t keep playing whack-a-mole to stymie Fiat leaking into Bitcoin? As always, stay tuned to CCN for the latest in Bitcoin news out of China. We will include a link to the full English translation as soon as it is released from English.Caixin.com.