Alibaba unit bans bitcoin trading ahead of IPO
China is cracking down on third-party transactions involving virtual currency
Taobao, a China-based online marketplace owned by Alibaba Group Holding Ltd., is to ban the sale of bitcoins beginning Jan. 14.
The move is part of a cleanup of Alibaba’s operations ahead of an initial public offering expected later this year.
Alibaba is making moves to eliminate fake goods from the online marketplace, China’s biggest. The move to stop bitcoin sales brings Taobao into line with a Chinese government crackdown on bitcoins.
In early December, China's central bank said the country's banks and payments systems were barred from handling the virtual currency. The People’s Bank of China is concerned about the rise of a currency it cannot control, backed by neither a government or a bank.
Later in December it pressured third-party payment services to close bitcoin trading, which has attracted speculators in the last few months after the price of bitcoins rose to above $1,000 US. The virtual currency is experiencing wild price swings.
That forced Shanghai-based BTC China, the world's largest bitcoin exchange platform, to stop taking Chinese yuan deposits.
The Taobao ban includes other virtual currencies and the sale of software related to bitcoin mining.
"In the interest of consumer protection, Taobao has banned the sale of bitcoins on the platform," Alibaba spokeswoman Florence Shih told Reuters.
Taobao and Alibaba’s shopping platform T-Mall had combined annual sales of 1 trillion yuan ($177 billion Cdn) in 2012 and are believed to have enormous potential because of their popularity in the world’s largest market.
Jack Ma, chairman of Alibaba Group, expects 30 per cent of China's total retail sales to be conducted online in five years' time.
Alibaba also plans to move into mobile gaming, a hot sector among Chinese consumers.
Alibaba’s IPO is one of the most hotly anticipated listings in the U.S. for 2014, and could become a tech market leader similar to Google or eBay.
The China-based firm has announced it would list on a U.S. exchange after becoming disillusioned in talks with the Hong Kong market.