China's central bank barred financial institutions from handlingbitcoin transactions, moving to regulate the virtual currencyafter an 89-fold jump in its value sparked a surge of investorinterest in the country.

Bitcoin plunged more than 20 percent to below $1,000 on theBitStamp Internet exchange after the People's Bank of China said itisn't a currency with “real meaning” and doesn't have the samelegal status. The public is free to participate in Internettransactions provided they take on the risk themselves, itsaid.

The ban reflects concern about the risk the digital currency maypose to China's capital controls and financial stability after asurge in trading this year made the country the world's biggesttrader of bitcoin, according to exchange operator BTC China.Bitcoin's price jumped more than ninefold in the past two monthsalone, prompting former Federal Reserve Chairman Alan Greenspan tocall it a “bubble.”