There is more news from China today as the clampdown on Bitcoin continues.  BTC China, the largest Bitcoin exchange in China — and the world — has announced it has stopped accepting deposits in yuan.  Existing yuan balances remain available, and deposits in Bitcoin are unaffected.  There also appears to be no suspension of withdrawals of yuan, although that will apparently change by January 31, 2014.

According to Bloomberg, the suspension of yuan deposits is the result of BTC China’s payment processors suspending their deposit services to the exchange.  That move comes in the aftermath of reports that the Peoples Bank of China (PBOC) has ordered Chinese payment processors to cease providing services to Bitcoin and other virtual currency exchanges by the Chinese new year (January 31, 2014).  While other exchanges are also reporting that their payment processors have stopped processing deposits, the details and scope of the suspensions remain unclear, as there is no official statement from the PBOC memorializing the suspension order.  According to news reports, the PBOC made the announcement in a meeting on Monday between PBOC representatives and several of China’s largest payment processors.

Assuming that those reports are accurate, while for the moment only deposits appear to be affected, come January 31 users will also be unable to withdraw yuan from BTC China and other exchanges via third party payment processors.  It remains unclear if there are vehicles for making deposits and/or withdrawals of renminbi that remain unaffected by the ban on payment processors doing business with the exchanges.  BTC China’s CEO, Bobby Lee, has said that BTC China is exploring its option, but offered no details.

The move by the PBOC to require payment processors to stop doing business with Bitcoin and other virtual currency exchanges follows the PBOC’s December 5, 2013 policy statement on Bitcoin.  The statement said that Bitcoin was not a legal currency in China, barred banks and other financial institutions from doing business in Bitcoin, and banned the sale of goods and services for Bitcoin.  The statement, however, did not explicitly bar payment processors from doing business with exchanges, and seemed to validate the legality of Bitcoin and other virtual currency exchanges by announcing that they would be regulated.  It also permitted users to continue to hold and exchange Bitcoin.

The move now by the PBOC to ban payment processors from doing business with exchanges — which will effectively shut them down unless another workable method for accepting deposits can be found — seems to be somewhat at odds with the PBOC’s implicit recognition of exchanges.  Some observers have suggested that it is likely that there will be further guidance from the PBOC clarifying its stance.  For the moment though, the signals are very mixed, to say the least.