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Bitcoin ends week lower after Bank of China ban

ForexDec 08, 2013 09:47AM ET
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Investing.com - Virtual currency Bitcoin ended the week sharply lower after China’s central bank said Thursday it was clamping down on transactions made using the currency.

The People’s Bank of China said Bitcoin did not qualify as a currency and lacked legal protections. The bank said financial institutions and payment systems were not allowed to take deposits from Bitcoin-related businesses.

However, the bank said that private individuals were free to use Bitcoin provided they knew that they were taking the risk on themselves.

“Bitcoins are virtual goods that have no legal status or monetary equivalent and should not be used as currency," the PBOC said. "Ordinary people are free to participate in transactions at their own risk."

BTC/USD dropped from a high of 1079 to a low of 576 on the world’s largest Bitcoin exchange, the Tokyo based MT Gox on Thursday.

Bitcoin was last trading at USD737, having settled back into its typical trading pattern of large price moves in both directions.

Rising demand from China has seen the country become the largest Bitcoin market in recent months, as buyers seek to profit from speculating in the currency.

France's central bank also issued a warning about what it called the "highly speculative" currency on Thursday, saying it poses a "certain financial risk" to users.

"Even if the high volatility of the Bitcoin is of possible interest for individual or professional speculators, they should be aware of the risks they are taking," the Bank of France said.

Bitcoin is digital cash for the internet and it is not backed by a government or central bank to regulate or issue it. It can be used to purchase goods and services from an increasing number of stores and online retailers.

Bitcoin rose above the USD1000 level last month after U.S. officials told a Senate committee hearing that virtual currencies are a "legitimate financial service".




Bitcoin ends week lower after Bank of China ban
 

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