Update | Chinese e-commerce giant Taobao bans bitcoin

Taobao, China's largest e-commerce platform, yesterday banned cryptocurrency bitcoin, the mining software and related materials, citing new government regulations.

The mainland giant said: "In an effort to promote healthy growth of the online trading market and more effectively protect our members' interests, Taobao will make several adjustments in compliance the relevant state regulations and policies."

The adjustments will take effect on January 14.

Online shops using the Taobao platform could risk losing their accounts if they are found selling bitcoin or the software and equipment used to create the digital currency.

This comes just as the value of bitcoin tumbled again after weeks of recovery, and once again highlighted its volatility.

The unit price reached 5,970 yuan (US$986) per coin on Monday, and despite a regained momentum due to wider acceptance of the virtual currency to pay for goods and services, it fell back to 4,718 yuan.

"The prices may have been reacting to the Taobao news" said Bobby Lee, CEO of China's largest bitcoin exchange, "but in the long term it won't affect bitcoin. People will find new ways of acquiring mining material.