BTC38 announced to its users on Wednesday that the company was having to suspend the use of 3rd party payment processors due to central bank policy.
The PBOC's warning to payment processors to steer clear of the cryptocurrency dates back to December 2013, and has already taken down one major exchange, BTC China, which closed two weeks later.
Without 3rd party payment processors, bitcoin exchanges have little ability to take Chinese yuan in payment for bitcoin. Few have the means to build the capability themselves, and so far none have seen fit to spend the money in what is likely to remain a tumultuous market.
BTC38's closure appears to be the result of a new aggressiveness on the part of the PBOC, which has stayed largely silent on the subject of bitcoin since its edict. In late March, reports broke that the Chinese government will begin penalising any bank transacting with bitcoin exchanges after 15th April. BTC38 directly cites these reports in the explanation for its closure.
The Chinese market remains important for bitcoin for reasons beyond its scale. With capital controls and heavily regulated markets, despite a transition to capitalism over the past three decades, it represents a dream test bed for demonstrating the decentralising aspects of the currency.
Most notably, bitcoin offers an easy way of evading bans on the export of money. By buying bitcoin with yuan and selling it into other currencies, Chinese people can almost untraceably evade capital controls.
Despite the crackdowns bitcoin remains big money in China. According to FiatLeak, a site which tracks bitcoin sales in various currencies, the country is still buying almost 10,000 bitcoin an hour, far in excess of any other nation.
Bitcoin prices fell 10% over Wednesday following the news, finishing the day at $436 a coin.
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