Prices recover after People's Bank of China governor says bitcoin ban "out of the question"

Speaking at yesterday’s Boao Forum in China’s Hainan Province, People’s Bank of China governor Zhou Xiaochuan clarified his institution’s view of bitcoin. “It is out of the question of banning bitcoin, as it is not started by central bank,” Xiaochuan said. “Bitcoin is more a kind of tradable and collectible asset, such as stamps rather than a payment currency.”

Prices rose sharply following Xiaochuan’s statement, skyrocketing from yesterday’s low of $347 to the $425 range, a gain of roughly 18%.

Although the statement does little to ease concerns that China will clamp down on bitcoin-based businesses in the banking sector, Xiaochuan did provide some context for the PBoC’s overall attitude towards virtual currencies. Given yesterday’s massive price drop following the news that some bitcoin exchanges have had their bank accounts cancelled in advance of a rumored April 15 freeze, even neutral bitcoin news from China is welcome.

It’s still unclear what the PBoC’s long-term strategy towards bitcoin will be, although an outright ban seems increasingly unlikely. In December of 2013, China issued new rules that would dramatically limit how bitcoin could be bought and sold, driving the price down from its $1,200 high. For most of Q1 2014, these rules were largely ignored or worked around using third-party services until rumors of a crackdown began late last month.