Huge losses for investors

The Chinese central bank’s announcement stemmed in part from the case of Chinese bitcoin trading website GBL, which closed unexpectedly in October and delivered huge losses to investors.

GBL began operating in May and had 4,493 registered users just before it closed.

Investors may have lost as much as 25 million yuan.

One investor who reported the case to the police claimed a loss of 90,000 yuan, according to media reports.

Though it triggered a short-term drop in the virtual currency, the announcement by the People’s Bank of China will make the whole system healthier and more sustainable, according to platforms BTC360 and BTC China.

If nothing else, it may be a turning point in attitudes towards bitcoin investment in China.

Baidu, which has accepted bitcoin since October, stopped accepting the virtual currency after the central bank announcement.

The recent large fluctuations in the bitcoin’s value rendered Baidu unable to safeguard users’ interests, the company said in a statement.

The Shanghai-based house seller and Shanda also stopped accepting bitcoin.

Individual investors in bitcoin are warned about the risks of the virtual currency, said a statement issued by five regulators, including the central bank, the China Banking Regulatory Commission and the Ministry of Industry and Information Technology.

The peak daily trading volume of bitcoins reached 90,000 on BTC China, while the peak transaction value has surpassed 200 million yuan.

In an online chat group, many BTC users complained about price drops and the difficulty in obtaining bitcoin.

“The bitcoin is not a real currency,” said Mark Matthews, head of research at Swiss private bank Julius Baer for Asia. “In fact, I don’t think virtual assets have a lot of wealth.”

Still, bitcoins continue to be used in many applications.

The mini boom in bitcoin software for smartphones is making it easier for consumers to use the virtual currency in place of cash for quick transactions, such as paying for food or splitting a bill. Firms such as Skype and Tesla Motors Inc still accept bitcoin.