Two More Banks to Ban Bitcoin Deposits

Two More Banks to Ban Bitcoin DepositsTwo more banks have banned customers from using their bank accounts for trading the bitcoin, adding another blow to the virtual trading currency business in China. China Guangfa Bank and the Shanghai Pudong Development Bank Co. made the announcements on their websites stating that institutional and retail customers will no longer be allowed to use their accounts in purchasing or selling Bitcoins and other virtual currencies.

If this banks detect any trading of the virtual currency these accounts will be suspended or closed down. This came after bank accounts of the two largest Bitcoin exchanges at domestic banks were forced to shut down in mid- April. Online exchanges as well as the entire industry are now facing challenges and without an incoming cash flow it will be hard for them to operate exchanges.

The china central bank along with the People’s bank of china stated in a report that the Bitcoin currency is a vehicle for speculation and is highly unstable. Traders are also warned that trading using bitcoins on online exchanges is risky due to the lack of regulation. Compared to conventional money the bitcoin and other virtual currency are generates by computers and are not backed by the central bank or the government. Just last December the central bank banned financial institutions from trading bitcoins and will prevent any money laundering risks that will come from the use of the digital currency.

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