China’s Baidu search engine halts virtual currency ads without warning

Speculation that move may be precursor to China issuing own answer to bitcoin

PUBLISHED : Saturday, 27 August, 2016, 4:43pm
UPDATED : Saturday, 27 August, 2016, 10:50pm

Baidu has quietly removed advertising for bitcoin and all other forms of virtual currency from its online service, two of China’s largest bitcoin exchanges say, signalling a growing wariness over the proliferation of online scammers.

The country’s most popular search engine froze cryptocurrency ads from Thursday, according to local exchanges OKCoin and Huobi. Huobi CEO Leon Li and OKCoin’s Jiang Anming, a member of its search engine marketing team, separately confirmed the ban. Baidu declined to comment.

Baidu stopped accepting bitcoins after the central bank barred financial institutions from handling transactions in late 2013, triggering a drop in the virtual currency.

Baidu has weathered a storm of public criticism of late over paid ads featuring everything from gambling websites to unconventional medical treatments, the latter blamed for the death of a medical student this year. The ban also reflects official sentiment. While China accounts for more than 90 per cent of global bitcoin trading, its central bank has said it’s not a “real” currency. The People’s Bank of China, which is studying the prospect of issuing its own virtual currency, has taken steps to prevent bitcoin from becoming entrenched in the financial system.

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“It could be a precursor to China being ready to push for a more nationalised approach to virtual currencies,” said Zennon Kapron, managing director of Shanghai-based consulting firm Kapronasia. It could also be a case of consumer protection “as there have been cases of scams” targeting users “more prone to speculative trading”.

Digital currencies gained prominence with the rise of bitcoin, which is mined with high-powered computers and operates with a distributed ledger that contains the payment history of every circulation. Financial institutions are experimenting with that underlying technology but its volatility – and episodes such as the highly publicised hacking of Hong Kong bitcoin exchange Bitfinex – have made regulators wary of its speculative nature.

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The Chinese central bank set up a research team in 2014 to study digital currencies and applications. It said in January it had consulted experts from Citigroup and Deloitte, though it didn’t specify what technology it would be using to issue its digital currency or how it would work in relation to the yuan.