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Shares of Chinese online retailer LightInTheBox surged by more than a quarter on the New York Stock Exchange early on Monday, after the company announced it had started to accept payment in bitcoin.
The Beijing-based firm is the latest in a growing list of companies keen to involve themselves with digital currencies in an attempt to woo investors. Many companies in China and abroad have had their stocks soar as a result of doing so, despite the Chinese authorities’ increasingly vocal criticism of bitcoin.
LightInTheBox, which sells goods ranging from wedding dresses to electronic devices to overseas customers, saw its shares surge from US$2.38 to US$3.52 at the start of trading on Monday. It said earlier in the day that as of January 5, the virtual currency was a legitimate means of payment on its main sites, LightInTheBox.com and MiniInTheBox.com. All transactions would be processed through BitPay, a US start-up backed by Hong Kong billionaire Li Ka-shing.
The shares later retreated, finishing Monday at US$2.81.
Before yesterday’s surge, the share price had shed 26 per cent between early January last year and January 2, 2018.
“I’m glad to introduce bitcoin as a new payment channel to our customers. We think blockchain could potentially be an important technology for us,” said Alan Guo, chairman and CEO of LightInTheBox, who was one of the founders of Google China.
However, the announcement comes at a time when the Chinese authorities are taking an increasingly firm line against bitcoin and digital currencies more broadly.
Last week, a commentary in state mouthpiece People’s Daily labelled the volatile cryptocurrency a bubble and a modern-day tulip mania.
As such, analysts said other Chinese retailers were unlikely to follow LightInTheBox’s lead.
“Bitcoin payment in China remains a grey area,” said Tang Xiaotang, founder of Chinese retail consultancy Nofashion. “Other Chinese retailers would not dare to go against the will of the government.”
LightInTheBox is not the only US-listed Chinese company to see its share price spike after announcing an interest in cryptocurrencies.
Social media platform Renren – sometimes referred to as the Facebook of China – saw its shares skyrocket in the US after it said it would launch its own virtual token, RR Coin, and that it was developing a blockchain-based open-source platform that can record users’ trading behaviour.
Investors liked the idea so much that shares in the company surged by more than 80 per cent on January 3, the day after Renren made the announcement in a “white paper”.
However, after the initial frenzy, the stock was trading in New York just slightly higher than its level before the surge, and, on Tuesday, Bloomberg reported that Renren had cancelled its initial coin offering, a way of distributing the virtual token and raising cash, after being warned off by regulators.
In September, the People’s Bank of China banned initial coin offerings.
Chinanet Online Holdings, a Nasdaq-listed internet company, surged more than 600 per cent on January 4 after it said a day earlier it would collaborate with another Chinese firm to develop blockchain-related technologies.