(Refiled to correct name of BTC China in paragraph 7)
By Pete Sweeney
SHANGHAI, April 16 BTC China, one of the
country's leading digital currency exchanges, has installed
China's first bitcoin ATM and launched an online app allowing
individuals to buy and sell bitcoins using mobile phones,
skirting local banking regulations seen as increasingly hostile
to so-called crypto-currencies.
Rising interest from mainland Chinese speculators was
credited for driving up global bitcoin prices last year to above
$1,000 on some exchanges. But a subsequent
crackdown by the People's Bank of China (PBOC) has seen the
digital currency sag, changing hands below $530 on Wednesday,
according to exchange-tracker CoinDesk.
That, in combination with scandals involving hacking, theft,
and fraud, have put pressure on digital currency markets around
the world. Tokyo-based bitcoin exchange Mt. Gox has given up
plans to rebuild under bankruptcy protection and asked a local
court to allow it to be liquidated, The Wall Street Journal
Unlike conventional money, bitcoin and other
crypto-currencies are generated by computers and are not backed
by any central bank or government, or by physical assets. They
can be exchanged through nearly any file transfer mechanism for
goods, services or cash - but the latter has proved a problem.
Many regulatory agencies around the world are concerned that
digital currencies can be easily used for money laundering or
the illegal purchase of weapons and narcotics, and have moved to
control or prohibit their use in ordinary commerce.
In December, the PBOC banned financial institutions from
trading in bitcoin, saying the government would act to prevent
money laundering risks from the digital currency. It did not ban
trading by individuals. Last week, two bitcoin
exchanges said their trading accounts at certain domestic banks
would be closed down by the lenders.
BTC China's chief executive Bobby Lee said by telephone that
his exchange is still in operation and has yet to receive any
notice from the bank that his accounts are being closed. "News
reports said it would be shut down by April 15. It's April 16
and nothing has happened," he said.
While trading volumes on his exchange are down 80-90 percent
from their peak, transaction levels were still healthy, said
Lee, on par with levels last September prior to bitcoin's spike.
The new ATM-like services from BTC China do not involve the
banking system at all.
The physical ATM, located in a cafe at a mall in Shanghai's
Zhangjiang technology park area, allows people to buy bitcoin
directly from the exchange for yuan inserted into the machine.
Users cannot withdraw cash.
The machine was lightly used during a visit by Reuters, with
just one client appearing to use it, but cafe manager Cheng
Mengyao said she had seen a steady stream of customers use the
machine for small transactions since it was installed.
The web app essentially allows transactions on a direct
peer-to-peer basis, as opposed to selling them on an open
exchange. This also avoids using the banking network or a public
online exchange, but means transactions are between individuals
and liquidity is limited to how much cash they have.
(Additional reporting by Shanghai Newsroom; Editing by Ian