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China bitcoin exchanges say certain banks to close their accounts

A mock Bitcoin is displayed on a table in an illustration picture taken in Berlin January 7, 2014. REUTERS/Pawel Kopczynski

SHANGHAI (Reuters) - Two of China's largest bitcoin exchanges said their trading accounts at certain domestic banks would be closed down by the lenders next week, the latest blow to the virtual currency.

Unlike conventional money, bitcoin is generated by computers and is not backed by any central bank or government, or by physical assets.

Huobi.com said in a statement posted on its website that Industrial and Commercial Bank of China Ltd would close its accounts by April 18. However, it added accounts at other banks were currently unaffected.

Rival BTC Trade said on its website that the Hangzhou branch of the Agricultural Bank of China Ltd would freeze all bitcoin trading accounts by April 15.

The exchanges did not cite a reason for the closures.

Officials at ICBC and AgBank were not immediately available to comment.

In December the central bank, the People's Bank of China (PBOC), banned financial institutions from trading in bitcoin, saying the government would act to prevent money laundering risks from the digital currency. It did not ban trading by individuals.

Since the ban, some media have reported that the PBOC had instructed domestic lenders to close the accounts of bitcoin exchanges by April 15. However the central bank said in a notice on their official Weibo micro-blogging website on March 21 that it has not issued such notices to banks.

Following the central bank ban on financial institutions trading in the digital currency, bitcoin exchange platform BTC China said it had stopped taking Chinese yuan deposits after a third-party payment provider abruptly cut off service.

Chinese Business News reported that the government had asked third-party payment services to stop handling bitcoin transactions.

(Reporting by Shanghai Newsroom; Editing by Kazunori Takada and Pravin Char)