Bitcoin price drops after China imposes new restrictions

By Felix I

Apr 28, 2014 07:56 AM EDT

The value of Bitcoin went through another 10% drop from $500 to $440 after BTC China stopped accepting local currency deposits from Chinese financial firm China Merchants Bank. The virtual currency has traded from $400 to $500 in the last few days, according to TechCrunch.

ZeroHedge speculates that the move is indicative of stricter rules to be implemented by the PBOC to set clear boundaries on its earlier rules. It also noted that there are still no official rules that would enforce the policy change, the report stated.

Another factor affecting the value of Bitcoin might by France's new tax rule. The French government reportedly plans to impose tax on the currency. The US has previously decided to classify Bitcoin as property rather than currency. Because of that, the virtual currency would be subject to tax transactions, the report explained.

Because of the control that the Chinese government exerts over banking transactions, the decentralized virtual currency has become an attractive option for many people there. For this reason, it is thought that Bitcoin could explode in China. However, if the government continues to impose restrictions on the cryptocurrency, its value could be negatively affected, TechCrunch reported.

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