China's largest search engine Baidu Inc halted its acceptance of Bitcoins after China's central bank banned financial institutions from using the virtual currency. The development caused the Bitcoin to fall on the Chinese online exchange BTC China to CNY 4,800 or USD 790, a Bloomberg report said. Last week, the Bitcoin price zoomed past USD 1,000.

On October 14 this year, a website hosting venture of Baidu started accepting Bitcoins as the digital money's popularity grew. However, the company issued a statement in its website today, which read, "Baidu's website-acceleration platform decided to suspend Bitcoin payment acceptance from Friday as recent large fluctuations in Bitcoin's value makes it unable to safeguard users' interests."

The company arrived at their decision after the announcement of the Chinese government. According to the People's Bank of China, Bitcoin has no "real meaning" and as such can't be given the same legal status as other currencies. However, the central bank said the public may still undergo Internet transactions using the digital money but the risk is theirs to handle. However, financial institutions and payment firms are not allowed to price their goods in Bitcoin, conduct buy and sell transactions in the virtual currency or insure any products linked to the Bitcoin.

BTC China Chief Executive Officer Bobby Lee told Bloomberg in a phone interview, "We're happy to see the government start regulating the Bitcoin exchanges." He said these would be beneficial for the consumers. He added that BTC is asking that authorities recognize the digital currency so that instead of being used for speculation, it can utilized for the purchase of goods and services.

Bloomberg reported that Bitcoins are now accepted by a growing number of online and brick-and-mortar stores as payment for various goods, ranging from smartphones to blenders to Gummi bears. A car dealer in California is one of the most recent vendors to accept the digital currency to pay for the Model S electric car of Tesla Motors Inc, the report added.