Thursday, 5 December 2013

Bitcoin Price Crashes as China Outlaws Bitcoin for Financial Institutions

Misleading title; it should of course read, Chinia GUARANTEES BITCOIN shall remain a PRIVATE currency! ;)
Anyone fancy Bitcoinn insurance? 
BOOMING market, RIGHT NOW! <g> 
"Bitcoin Price Crashes as China Outlaws Bitcoin for Financial Institutions
The price of bitcoin fell by $300 this morning after China’s central bank warned financial institutions to steer clear of the digital currency.
According to the People’s Bank of China, it doesn’t consider bitcoin a threat to China’s financial system, but it does believe the digital currency carries significant risks.
“The concern is that it interferes with normal monetary policy operation,” Hao Hong, head of China research at Bocom International Holdings Co. in Hong Kong, told Bloomberg.
“It represents an unofficial leakage to the current monetary system and trades globally. It is difficult to regulate and could be used for money laundering. I think the central bank is right to make this move,” he added.
While the central bank is telling the nation’s financial institutions not to deal with bitcoin, it said individuals are free to buy, sell and use the cryptocurrency, if they wish, but they must take on the risk themselves."

More!

"This is the press release. The notice is below
In order to protect the public's property rights, to protect RMB's official currency status, to prevent money laundering risk and to protect financial stability, the People's Bank of China, Ministry of Industry and Information Technology, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission jointly issued "The People's Bank of China, Ministry of Industry and Information Technology, China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission Notice on preventing Bitcoin risk" (2013 no.289, "Notice" hereinafter)
The Notice clarifies the status of Bitcoin. Bitcoin is not issued by a monetary authority, it does not have the status of legal tender and obliged acceptance status of currency, it is not currency in the true sense. Bitcoin is a specified virtual commodity, it does not have equal legal status with currency, and it cannot and should not be circulated as currency on the market. But, the general public have the freedom to participate in Bitcoin trading as a commodity trading on the internet on the condition they carry their own risk.
The Notice requires, at this stage, all financial institutions and payment institutions must not use Bitcoin to set price for product or services, not buy or sell Bitcoins, not act as a market maker for Bitcoins, not underwrite insurance related to Bitcoin or cover Bitcoin in insurance, not directly or indirectly provide other Bitcoin related services, including registering, trading, clearing or settlement; not accept Bitcoin or use Bitcoin as payment tool; not start a Bitcoin and RMB or foreign currency exchange; not start a Bitcoin saving, trust or mortgage service; not issue Bitcoin related financial services; not use Bitcoin as the investment in trusts or funds.
The Notice requires, that Bitcoin websites that act as the main trading platform, should follow the Telecommunications Act and the Regulation on Internet Information Service, and register according to law. Also, because Bitcoin has a higher risk of money laundering and being used by criminals, the Notice requires the relevant organizations to follow the requirements of the Anti-Money Laundering Act and fully comply with the legally required anti-money laundering procedures like KYC and suspicious transaction reporting, to prevent Bitocin related money laundering risks.
To prevent virtual goods like Bitcoin using the name of "virtual currency" to over-promote, damaging the public interest and the RMB's position as legal tender, the Notice requires financial organizations and payment organizations in their daily tasks to use the correct concept of currency, to emphasize on public education about currency, and to add to public financial knowledge education the contents of correct knowledge of currency, correct views of virtual goods and virtual currency, rational investment, control of investment risk and defending one's financial safety, in order the public have correct views on currency and investing.
In the future, the People's Bank will do its duty and continue to closely monitor the Bitcoin trend and related risks.
Below is the Notice
People's Bank of China
Ministry of Industry and Information Technology
China Banking Regulatory Commission
China Securities Regulatory Commission
China Insurance Regulatory Commission
Notice on preventing Bitcoin risk
Recently, a so-called Bitcoin calculated using certain computer programs gained widespread worldwide attention, there are also organizations and persons in China taking this opportunity to promote Bitcoin and related products. In order to protect the public's property rights, to protect RMB's official currency status, to prevent money laundering risk and to protect financial stability, according to the People's Bank Act, the Anti-Money Laundering Act, the Commercial Bank Act, Telecommunications Regulations etc, the following notice is made:
1 Correct knowledge of Bitcoin
Bitcoin has four main characteristics: no central issuer, limited quantity, no geographical limits and anonymity. Although it is called currency, it is not issued by a monetary authority, it does not have the status of legal tender and obliged payment status of currency, it is not currency in the true sense. Bitcoin is a specified virtual commodity, it does not have equal legal status with currency, and it cannot and should not be circulated as currency on the market.
2 Financial institutions and payment institutions must not start Bitcoin related business
At this stage, all financial institutions and payment institutions must not use Bitcoin to set price for product or services, not buy or sell Bitcoins, not act as a market maker for Bitcoins, not underwrite insurance related to Bitcoin or cover Bitcoin in insurance, not directly or indirectly provide other Bitcoin related services, including registering, trading, clearing, settlement; not accept Bitcoin or use Bitcoin as payment tool; not start a Bitcoin and RMB or foreign currency exchange; not start a Bitcoin saving, trust or mortgage service; not issue Bitcoin related financial services; not use Bitcoin as the investment in trusts or funds.
3 Strengthening regulation of Bitcoin websites
According to the Telecommunications Act and the Regulation on Internet Information Service, websites that provide Bitcoin services like registration, trading etc should register with the telecommunications regulation authorities.
The telecommunications regulation authorities, following the determinations and punishment opinions of the relevant management authorities, should close down illegal Bitcoin sites according to law.
4 Prevent possible Bitcoin money laundering risk
Branches of the People's Bank should closely monitor the trends and activities Bitcoin and other similar virtual commodities with the characteristics of anonymity and easy cross-border access, seriously consider its money laundering risk, research and implement targeted preventative measures. The branches should include lawfully established organizations that provide Bitcoin registration or exchange services in its area into its anti-money laundering monitoring, and supervise them to strengthen their anti-money laundering monitoring.
Bitcoin websites should earnestly carry out their anti-money laundering duty, confirm the identities of their users, have them register using their real names, and register their name and ID card number. If financial institutions, payment institutions or Bitcoin websites discover suspicious transactions involving Bitcoin or other virtual commodities, they should immediately report it to the China Anti-Money Laundering Monitoring and Analysis Center, and cooperate with the People's Bank's investigation; if they find evidence of fraud, gambling, money laundering using Bitcoins, they should report it to the police.
5 Strengthening public education on money knowledge and investment risk
Departments, financial organizations and payment organizations should in their daily tasks teach the public the correct concept of currency, to emphasize on public education about currency, and to add to public financial knowledge education the contents of correct knowledge of currency, correct views of virtual goods and virtual currency, rational investment, control of investment risk and defending one's financial safety, in order the public have correct views on currency and investing.
Financial monitoring authorities can set implementation details according to this notice
Would the People's Bank branches please distribute this Notice to financial organizations and payment organizations in their area. Any new situations or questions arising from this notice please report promptly to the People's Bank."
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