UPDATE on the 18th of December: BTC China Stops All Yuan Deposits – Bitcoin Price Crashes
The People's Bank of China (PBOC), the Chinese central bank, has today banned payment companies from doing business with bitcoin exchanges.
The PBOC met with most of the top Chinese third-party payment providers this morning and digital currency was an important part of the discussion. According to sources claiming to be close to the institution, the PBOC in no uncertain terms, directed third-party payment firms not to do any business with Bitcoin exchanges in China, so they were told by people who attended the meeting.
Upon encountering these rumors on Chinese internet forums the financial newspaper "National Business Daily" (link in Chinese) contacted the PBOC and the leading third-party payment providers in China, Alipay and Tenpay, and they all confirmed the reports.
The PBOC now explicitly requires that banks and payment companies not provide payment and Settlement services to Bitcoin, Litecoin and other peer-to-peer currency trading sites. For payment companies that have already done business with Bitcoin Exchanges, should end their business cooperation; withdrawals of balances should be completed before the Chinese Spring Festival (January 2014), and new payment services are not allowed.
On December 5th the PBOC banned banks in the country from engaging in financial transactions in Bitcoin, but left private clients to make their own decisions, leaving a space for supporters of the digital currency to claim it can still operate in. Today's action can almost completely stop Chinese demand for Bitcoin, as individuals will not be able to purchase it using banks or third-party payment providers.
