China gets first bitcoin ATM, skirting bank crackdown

By April 16, 2014Bitcoin Business
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China gets first bitcoin ATM, skirting bank crackdown

SHANGHAI (Reuters) - BTC China, one of the country's leading digital currency exchanges, has installed China's first bitcoin ATM and launched an online app allowing individuals to buy and sell bitcoins using mobile phones, skirting local banking regulations seen as increasingly hostile to so-called crypto-currencies.

Rising interest from mainland Chinese speculators was credited for driving up global bitcoin prices last year to above $1,000 on some exchanges. But a subsequent crackdown by the People's Bank of China (PBOC) has seen the digital currency sag, changing hands below $530 on Wednesday, according to exchange-tracker CoinDesk.

That, in combination with scandals involving hacking, theft, and fraud, have put pressure on digital currency markets around the world. Tokyo-based bitcoin exchange Mt. Gox has given up plans to rebuild under bankruptcy protection and asked a local court to allow it to be liquidated, The Wall Street Journal reported.

Unlike conventional money, bitcoin and other crypto-currencies are generated by computers and are not backed by any central bank or government, or by physical assets. They can be exchanged through nearly any file transfer mechanism for goods, services or cash - but the latter has proved a problem.

Many regulatory agencies around the world are concerned that digital currencies can be easily used for money laundering or the illegal purchase of weapons and narcotics, and have moved to control or prohibit their use in ordinary commerce.

In December, the PBOC banned financial institutions from trading in bitcoin, saying the government would act to prevent money laundering risks from the digital currency. It did not ban trading by individuals. Last week, two bitcoin exchanges said their trading accounts at certain domestic banks would be closed down by the lenders.

BTC China's chief executive Bobby Lee said by telephone that his exchange is still in operation and has yet to receive any notice from the bank that his accounts are being closed. "News reports said it would be shut down by April 15. It's April 16 and nothing has happened," he said.

While trading volumes on his exchange are down 80-90 percent from their peak, transaction levels were still healthy, said Lee, on par with levels last September prior to bitcoin's spike.


The new ATM-like services from BTC China do not involve the banking system at all.

The physical ATM, located in a cafe at a mall in Shanghai's Zhangjiang technology park area, allows people to buy bitcoin directly from the exchange for yuan inserted into the machine. Users cannot withdraw cash.

The machine was lightly used during a visit by Reuters, with just one client appearing to use it, but cafe manager Cheng Mengyao said she had seen a steady stream of customers use the machine for small transactions since it was installed.

The web app essentially allows transactions on a direct peer-to-peer basis, as opposed to selling them on an open exchange. This also avoids using the banking network or a public online exchange, but means transactions are between individuals and liquidity is limited to how much cash they have.

(This story has been refiled to correct name of BTC China in paragraph 7)

(Additional reporting by Shanghai Newsroom; Editing by Ian Geoghegan)

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