Baidu stops accepting bitcoin payment after government ban

Search engine follows central bank's lead in barring currency, causing price plunge

PUBLISHED : Sunday, 08 December, 2013, 6:27am
UPDATED : Sunday, 08 December, 2013, 6:27am

Baidu, China's biggest internet search engine, has stopped accepting bitcoins after the central bank barred financial institutions from handling transactions, triggering a drop in the virtual currency.

Bitcoin fell more than 20 per cent and was quoted at 4,250 yuan (HK$5,383) yesterday afternoon on BTC China, the most active online exchange where the digital money is traded.

A Baidu website-hosting venture started accepting the currency on October 14 as bitcoins gained popularity in China, fuelling a global rally. Prices topped US$1,000 last week, compared with about US$138 two months ago on Bitstamp, another web platform where bitcoin is exchanged for other currencies.

But the People's Bank of China said bitcoin was not a currency with "real meaning" and could not be accorded the same legal status.

"Baidu's website-acceleration platform decided to suspend bitcoin payment acceptance from Friday as recent large fluctuations in bitcoin's value makes it unable to safeguard users' interests," Baidu said.

The decision followed the government's announcement, the Beijing-based company said.

The central bank barred financial institutions and payment companies from giving pricing in bitcoin, buying and selling the currency, or insuring bitcoin-linked products. It said the public was free to participate in internet transactions provided they took on the risk themselves.

The ban signals concerns that the digital currency may threaten capital controls and financial stability. China became the world's biggest bitcoin trader this year.

Bitcoins, which exist as software and are not regulated by any country or banking authority, have surged in value amid increased investor interest.