The People's Bank of China has ruled that Bitcoin is not a proper currency and has barred Chinese banks from handling it, Finextra reports.

According to the site, the People's Bank of China said Bitcoin is a virtual good, not a currency, and should not be used as a currency. The central bank said Chinese financial institutions "may not conduct business associated with Bitcoins."

And according to The Wall Street Journal, Chinese banks will not be allowed to offer Bitcoin-related services such as deposits, custody services or collateral business. They also are barred from offering insurance services to Bitcoin-related business or issuing trust and fund products invested in Bitcoin, The Journal said.

The Chinese central bank said private individuals are free to trade in Bitcoins but warns that Bitcoin is a risky investment because of its volatility. In addition, it stressed that Bitcoin represents an attractive tool for money laundering and that it can be used by criminal gangs, according to Finextra.

Chinese online Bitcoin exchanges will be required to file records with regulators and obey anti-money-laundering rules by disclosing suspicious transactions to the authorities.

Separately, Banque de France, the French central bank, has issued a warning about the risks associated with Bitcoin, according to Reuters. The news agency quoted the French central bank as saying that the price of Bitcoin in legal currencies is inherently volatile and that users may experience difficulties in converting Bitcoin to real money. Banque de France noted that the anonymity of Bitcoin raises the risk that it could be used for money-laundering and terrorism-financing.

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