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Wednesday, December 18, 2013

More Perils and Prospects for Bitcoin Investment

It has been an interesting and informative day for people interested in Bitcoins.

Fausto Sanchez writes at JD Supra that "Bitcoins Mean Business," and notes that even though Bitcoins are a new currency, their increase in value and the increasing attention that businesses have continued to pay to Bitcoins means that the currency may become a significant force in the market.  The article does a good job of summarizing what Bitcoins are and why they have become so popular.

Nathalie Beauregard writes, also at JD Supra, in a more measured manner.  She points out the uncertainties in Canadian law when it comes to investing in Bitcoins and highlights numerous areas of the law that will need to be clarified for those interested in investing Bitcoins in Canada.  Ultimately, she recommends holding off on Bitcoin investment in Canada until investors get clarification of the issues she highlights through prior approval or guidelines from regulators.

Meanwhile, however, The Guardian reports:
The price of bitcoin has plummeted following an announcement from China's largest bitcoin exchange that it would no longer be accepting new yuan deposits. 
BTC China said that due to action by a third-party payment provider, YeePay, it could no longer accept deposits in the Chinese currency, although it would still be able to process withdrawals. BTC's chief executive, Bobby Lee, said that YeePay gave notice on Wednesday morning Shanghai time that it would no longer provide services. 
Lee blamed government regulation for the decision. China's central bank warned in early December that bitcoin was not legally protected and had no "real meaning", and barred financial institutions from using the currency.
Further coverage on this incident from Ars Technica is available here.  Also, Dan Harris of the China Law Blog thinks that "this is the end of Bitcoin in China."  The previously-mentioned concerns arising from the regulatory uncertainty of Bitcoins in other countries and from the nature of the currency may end up being overshadowed by this incident if Harris' assessment is correct.

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