Chinese financial officials said past year they plan to crack down on cryptocurrencies because Bitcoin and other virtual currencies were often used to finance terrorist groups and launder money out of the country.
“It means platforms facilitating trading between virtual currencies and legal tenders will not be allowed in China”, the source said.
China’s largest bitcoin exchanges said on Monday they were still awaiting clarification from the government following more media reports that Beijing was planning to ban trading of virtual currencies on domestic exchanges.
The regulatory move came after the central bank and other departments Monday imposed an immediate ban on fundraising using new blockchain-based currencies, also known as initial coin offerings (ICOs).
Regulators in China have been investigating the domestic market for bitcoin and other virtual currencies since the beginning of the year. The decision impacted trading prices for nearly all virtual currencies.
The People’s Bank of China did not respond to a request for comment.
China was once the world’s largest Bitcoin marketplace, accounting for almost 90% of global trading. The market was yet to recover fully from the shock that it received in the early part of last week when the Chinese regulators had banned the issuing of ICOs and also stopped the investors and traders from China investing in such ICOs. The process is fast and easy with convenient and advanced trading platform (desktop and mobile), low spreads and instant execution. “The virtual currency itself is not the problem, but the illegal behaviours that the virtual currencies enable are where the problems lie”, he said.
“I think there is too much money to actually stop people from trading.The best they could do is ban exchanges but people will just use VPN or find another way”.
The digital currency trading platform Guojiaowan said Friday afternoon that all digital coin trading on its platform has been suspended on the request of regulators.
“I would assume that if China shuts down trading on continuous order books of the large exchanges, the price would drop below $4,000, or the price of the US dollar price of bitcoin would catch up to where it’s trading equivalently in China”, he said.