Bitcoin Forum

The People's Bank of China has issued today that Bitcoin is a "fictitious currency" and that it cannot be used for circulation as currency in the market in China.

http://squawkonomics.com/2013/12/05/pboc-states-bitcoin-cannot-be-circulated-in-the-market/

The statement regarding banks and financial companies applies to payment companies, or 支付 companies, as well.

http://squawkonomics.com/2013/12/05/pboc-states-bitcoin-cannot-be-circulated-in-the-market/

Sources are from http://money.163.com/13/1205/15/9FBFR87P00254TI5.html and http://www.cnbeta.com/articles/263392.htm see for yourself, and stay tuned, Squawkonomics will be updating you as we get new information in.

Yeah because they can't control the price and can't put a 20% bank charge.

So if payment companies can't accept bitcoin it means that TaoBao can't accept payment in bitcoins

Today btc down almost 300 usd for that  :-[

When China talks crap, the market tanks -  buy buy buy on the dip baby!

this is good news for those who feared a China domination of bitcoin. Oh, and I think it is only financial institutions that are barred, not merchants.

Allow me to reiterate:

中国人民银行等五部委发文，要求防范比特币风险。通知明确表示比特币是一种特定的虚拟商品，不具有与货币等同的法律地位，不能且不应作为货币在市场上流通使用。

Translation: The People’s Bank of China has issued a statement requiring guard and wariness regarding Bitcoin’s risk. In a clear notification statement, Bitcoin is a type of particular fictitious and theoretical commodity, not one possessing the status of legal, and moreover cannot act as circulating currency in the market.

This does NOT just apply to financial companies and banks, as is clearly stated from the PBOC development today.

More in the link I posted.

it's a pity that we won't be able to use BTC in taobao ....

Bitcoin will survive this as it has many setbacks before

Bring it on

Ride the roller coaster that is BTC!

It hit ~1300 bunch of people sold out, it just did it again.
Maybe ~$1300 is just most peoples sell out number.
We will finish with all these day traders, then btc will stabilize.

Also, unlike stocks BTC has a value outside of what you can sell it for.

You mean intrinsic value? You are mistaken. It's stocks that have intrinsic value (at least good stocks). That value comes from owning market share, production capacity, etc. All value of Bitcoin comes from trust.

That said, trust can be a pretty powerful force.

I know it's debatable, but I think bitcoin does have intrinsic value based on it's utility and privacy. A stock is a promise to pay back with interest on a capitol investment. A promise made by one entity that may fail. Bitcoin has the backing of all it's users and is less likely to fail, because there is no central failure point.

Where will people buy their drugs now that Silk Road no longer takes them?  ha ha just kidding

wizard currency for wizards on PCP

What utility? Sure I can buy a few goods and novelties online with it, but I can't pay for food, gas, rent, insurance or any of those sort of things with it unless I convert it back to USD.

And what privacy? From what I've been reading on here, almost every exchange requires you provide photo ID, proof of residence, a bill of some sort or paystub, etc. Aside for the "big/important" things like insurance and rent, I've never had to provide any of those things when buying things online. What privacy?

They haven't outlawed it yet though they just say it's not a "currency".  So it can still be used between 2 ppl, just not with banks I think.

Just got a look at the PBOC official statement in Chinese at http://www.pbc.gov.cn/publish/goutongjiaoliu/524/2013/20131205153156832222251/20131205153156832222251_.html and got it translated. Here's the highlights of what it says:

On the PBOC’s website in Chinese, the PBOC, China Banking Regulatory Commission (CBRC), China Securities Regulatory Commission (CSRC), and China Insurance Regulatory Commission (CIRC) have together issued in a joint statement the following highlights of what it forbids:

1. Requiring at the present stage, every financial institution and payment institution cannot set prices in Bitcoin, nor execute transactions.

2. Bitcoin cannot be used as a payment tool to settle accounts.

3. Cannot use Bitcoin for foreign [and domestic] currency exchange.

4. Bitcoin cannot be used in trust funds, other investment funds.

5. Cannot issue financial products and services in Bitcoin.

More highlights of the development here at http://squawkonomics.com/2013/12/05/bitcoin-gets-qq-coined-in-china-pboc-and-regulatory-commissions-statement-highlights/

But everyone else can right?

Every interesting - I've been following the crash.

It doesn't create income, so it doesn't have intrinsic value. It can be a good store of arbitrary market value though, due to its utility.


Erm... no. That is a bond.
A stock is a fractional ownership in an enterprise, which is, if you chose the stock well, a productive entity in the real economy with employees, market and assets.


In theory... But have you seen stampeding cattle? And stampeding humans? ;)

You are right about both these things. Most can't pay YET. Although I buy lots of things all the time and it's growing exponentially, and the real estate I'm buying with my imaginary money will be rented for bitcoin. Bitcoin is far, far more private than PayPay, credit cards, or whatever else your using on the internet. Those methods expose your financial information to strangers. Bitcoin is simply better money than the USD.  

Ok, a stock is more of a hope for future profit then.

Was watching the same story on CNBC TV and Bitcoin prices dropping at the same time. 
Isn't a lot of the hardware made in China?  Hopefully they will be able to continue to accept bitcoin for payment of hardware.
 

That caused the today's bitcoin price fall. China are a new and important market and with this move the china involvement in bitcoin market is limited. I wonder what will happen to china's exchangers though as this new rule (or instructions) is against them.

True and the chinese issue hits at both utility and privacy.  Notice how they want all exchanges to aml and want banks to have nothing to do with bitcoin which means they can refuse to work with exchanges.  It's interesting that the chinese went the opposite route of US where in US we got trusts and official bitcoin denominated investments and chinese want nothing to do with that.  It's more likely they want the yaun to become reserve currency and don't want bitcoin to interfere with their plans.

Now bitcoin price is gone up again.

Now trading as 1 BTC = $1140


Told ya dude, BitCoin price will rise again!

Is this going to effect Baidu accepting btc for a payment?

No problem, only fictitious institutions are barred. The price has been corrected now after the false alarm.

Since you actually seem to know what you're talking about, can you clarify your opinion on whether this is good news or not? I'm having a hard time separating the fact from the fiction - some seem to say "this is a wonderful endorsement of Bitcoin, unicorns and rainbows will follow" and others seem to be more ... hesitant. To me, the statement you have translated above (and the subsequent ones in this thread) do not appear to be good news for Bitcoins adoption especially in this huge emerging market and the subsequent price recovery seems presumptuous. However, I cannot ignore that the price has recovered and - as above - my inability to separate truth from fiction regarding this announcement doesn't really help bring clarity to these muddy waters.

I'd really appreciate your candid view.

Price recovery has to do with traders and nothing with government.

Hi Oblong Meteor

Let me take this time to explain to you in no uncertain terms what is going on here.

Bitcoin in China has been relegated to the status of QQ Coins.

QQ Coins developed from the QQ Messenger platform in the early 2000s, and functioned as a way to buy and sell virtual items in games, to upgrade to the next level of a video game, to get that special shield that you would otherwise have to wait to Level 50 to acquire. QQ Coins are more similar to Craftcoins in their usage today in China, rather than Bitcoin's much more open use abroad.

China's government in 2009 felt QQ Coins were becoming too much of a potential threat to the renminbi, and in 2009 decreed QQ Coins as a fictional currency. Needless to say, QQ Coins were leashed in China from that day.

This week saw China's government use the exactly same terms, 虚拟货币, or fictional, theoretical, virtual currencies. But the tone of the words is more towards fictional since they talk about the need to education the people of what a "correct" currency is.

Chinese people cannot use QQ Coins to purchase any real goods and services. That includes Baidu, that includes Jiangsu Mobile, China Mobile, everything. Real products and services offered by these companies cannot be purchased with "fictitious" currencies.

This is why Jiangsu Mobile changed their website to remove any mention of accepting Bitcoin payments.

Bitcoin now is of the same legal and utility status as QQ Coins in China now. All the above companies now would not dare accept Bitcoin as payment for any real goods and services, due to the People's Bank of China and joint regulatory commission decree. Any legal company in China would not dare accept Bitcoin as payment for any real goods and services under the current regulations.

For further details, refer to http://squawkonomics.com/2013/12/05/bitcoin-gets-qq-coined-in-china-pboc-and-regulatory-commissions-statement-highlights/

Its interesting that 11 of the 13 largest companies in the world are Chinese banks. They are fearful of the success of bitcoin.

Guys, we R in a lot of trouble here. I have been predicting this the whole time. Check out this pic I found from deep underground china. Look at what they R doing over there. Mining. Mining away at massive loads of Bitcoins. This whole latest sell-off, its all a ploy. They are just testing the markets. Getting a feel for how weak we all really R. And now they know. If we all sell off all R Bitcoins, China will buy them all up, and add them to their already massive heaps. Dont fall for the ploy. Keep Ur coins. Stay strong fellow BTCers. we will make it through. Those of us who keep R coins will not B working forced to slave away 4 the Chinese in massive mining operations once they rule the world w BTC.

http://s7.postimg.org/4fqkdtcqz/china_internet_jpeg.jpg

I have tried to find a list of largest companies in which more than half are Chinese, without any success. Could you provide a reference?

This is not correct - you *can* sell your BTC for RMB on btcchina and other exchanges (they do now insist on ID which is no different to other major exchanges).

You *cannot* sell QQ coins for RMB (via any equivalent to an exchange) so that is a *huge* difference.

The latest statements basically restrict BTC to being more like a "stock" (which you can speculate on) than to being the equivalent of QQ coins (which function more like "reward points" that you can exchange for "virtual goods").

Hi Ciyam,

You CAN exchange your QQ Coins for real money.

http://www.scmp.com/article/590157/taobao-carries-qq-coins

Key quote here: "Online auction sites such as Taobao are "part of the problem" [Kekky note: not my opinion!!] as they allow users quick and easy exchange of QQ coins back to real money.

The problem is that similarly to QQ Coins not being able to buy real goods and services within the domestic Chinese economy, Bitcoins are now not able to buy real goods and services within the domestic Chinese economy.

Cannot they use BTC-e? It requires no identification, and is about to become the world's second largest exchange by volume (look at the daily charts here (http://bitcoincharts.com/markets/)). Of course, they would need to obtain dollars or euros first, but that is not very difficult.

In the article you linked to I see this:


So although it might be happening it is not according to the rules (and likely will be stomped on) - again this is not the same situation as BTC.

Hi Ciyam,

That article was originally posted in 2007, and updated in 2012. Since 2007 until now, QQ Coins have been able to exchange for RMB on Taobao, and people have been able to exchange RMB at smaller exchanges as well for many years.

QQ Coins and Bitcoin similarly can be exchanged for RMB, of course. The December 5 PBOC statement clearly stated that people are free to trade in Bitcoin, provided they assume the risk.

The key point here is that the December 5 PBOC statement stated that Bitcoin cannot be used to buy or sell domestic physical goods and services in China. It cannot circulate as currency in the market for any real goods and services. Virtual goods and services with QQ Coin and Bitcoin are generally not affected by the PBOC statement. So that much is clear.

Now, the PBOC statement leaves room open to enforce new regulations with this line here:

3 . 不能用比特币与人民币及外币的兑换服务

Translation: Cannot use Bitcoin for foreign [and domestic] currency exchange service.

The PBOC could possibly use this to enforce currency exchange restrictions, but currently we see exchanges operating as normal. So currently that does not appear to be affected.

It is interesting to note that on China state TV, Bitcoin is largely presented as an asset class in charts, rather than that of a currency, and has been doing so over the summer. It's price was listed on financial TV shows next to the Shanghai Composite, to show comparisons between asset classes for investors. So it is not surprising that the PBOC classified Bitcoin as an investment in which the bearer holds all risk, rather than elevating it to currency status.

Hope this helps, and thank you for your interest!

-Kekky

Hi kekky,

You can apparently buy all sorts of illegal things on Taobao - I guess that is simply because of the power of the owners.

That doesn't make any comparison between QQ coins and Bitcoins (due to Taobao) either correct or sensible - the fact that you can buy illegal things on Taobao does not put QQ coins and BTC on a par - it just shows how things work in China.

Wow, the bitcoin price was shown everyday in on a financial tv show on the state TV over the summer?!  :o
It seems even the boss there considers Bitcoin as a commodity (like gold) and a choice of investment (rather than scam).  ;D

Thank you very much for this. Really appreciate it.

he is right, China, or any other government, would be insane to acknowledge bitcoin as a proper currency. Cryptocurrencies arent mature yet.