Bitcoin breaks $500 after rumored China deadline passes

According to the rumor posted last month by China’s Caixin financial news service, April 15 would be a day of reckoning for bitcoin exchanges across the country. Accounts would be closed, and remaining funds seized. Customers would be unable to deposit new funds to buy bitcoin, and exchanges would be unable to deposit earnings in the country’s banking system. If the rumors were true, on April 15, bitcoin would be effectively banned in China.

The business day in China has come and gone. April 15 passed without bitcoin crackdown, or even a statement, from the People’s Bank of China. It appears the entire affair, which saw bitcoin prices drop by roughly $250, was little more than unfounded gossip.

Not surprisingly, bitcoin prices have surged. Almost immediately after the rumored deadline passed, the price climbed from $450 to around $513. The price has settled somewhat since, with bitcoin currently selling at $492.

Throughout all of this, the official policy of the People’s Bank of China has remained unchanged. New guidance on bitcoin was offered in December, and some forms of deposit were forbidden. Since that time, the only significant statement was from the governor of the PBoC last week, who explicitly stated that his organization considered a bitcoin ban “out of the question” because it wasn’t a currency.

More troubling, however, is the seeming instability of the Chinese banking industry. Even though they had received no directive from the PBoC, several regional banks decided to act on the rumors of coming bitcoin regulation. Several smaller exchanges were strongly encouraged to close their accounts, and two major exchanges have announced plans to move their operations offshore due to the regulatory uncertainties.