Bitcoin prices Friday tumbled almost 13% on reports that Chinese
Internet company Baidu Inc. (BIDU, K3SD.SG) stopped accepting
payment in the virtual currency following a warning raised by the
country's central bank.
The People's Bank of China on Thursday said financial
institutions shouldn't take deposits from bitcoin-related
businesses or provide them insurance or custody services. The
central bank also warned of risks from speculative trading and
money laundering associated with bitcoin.
The Chinese government's concerns about bitcoin are a blow to
the fledgling currency, which has been surging for weeks partly due
to growing interest from China.
The price of a bitcoin stood at $909.71 on Friday, based on the
CoinDesk index of three popular exchanges for the currency, down
12.7% on the day.
Several media outlets, including Bloomberg News, reported that
Baidu posted an announcement on its website about the suspension of
bitcoin payments. Baidu started accepting bitcoin as a payment
method for its online security and firewall services in
mid-October, although it isn't known how many transactions took
place.
A growing number of venture capitalists have been investing in
bitcoin-related companies, but widespread volatility about the
unregulated currency has created uncertainty about its ultimate
value. Bitcoin isn't backed by a central bank and is created
through a computer process called "mining."
Bitcoin prices started the year at less than $20, but have
surged above $1,000 in recent weeks. Other governments, including
the U.S. and France, also have expressed concern about its
speculative nature and the potential for money-laundering and
illegal activities.
Write to Robin Sidel at robin.sidel@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires