Bitcoin

Bitcoin Price Drops After Report China Will Shut Down Cryptocurrency Exchanges

Bitcoin, the widely popular digital currency, saw its price drop late last week after a news report surfaced that China was gearing up to shutter local cryptocurrency exchanges.

According to a report in Reuters, sources close to a regulatory committee that is in charge of online finance activities told Caixin, the Chinese-language financial news site, that authorities will shut down the bitcoin exchanges in the country. Although Reuters noted it was not able to confirm the report, two sources in direct contact with three bitcoin exchanges in China — including BTC China, Huobi and OKCoin — said they have not heard from the government as of yet.

Earlier this month, China enacted an immediate ban on funding of those offerings. At the time, TechCrunch reported that the nation’s central bank said ICOs have “disrupted the economic and financial order.” The ban comes at a time when the controversial fundraising activities have drawn attention and triggered no small share of scams. According to CNBC, the industry itself is worth hundreds of millions of dollars. The order, as noted by Caixin, was handed down by a committee studying internet-based financial risk, which offered up a list of 60 blockchain exchanges that will be inspected and reported on. Until then, the freeze remains in place.

Additionally, seven government administrations said jointly that the ICO exists as an unauthorized fundraising effort that may, in fact, be tied up in scams. The roster of government entities issuing that statement included the People’s Bank of China and the China Banking Regulatory Commission, among others involved in the Chinese bitcoin exchange. The statement also warned that financial institutions should not be involved with ICO trading activity. Individual investors and firms that have completed ICOs and raised funds should be prepared to give up those funds per the statement, as CNBC noted.

Greg Dwyer, business development manager at cryptocurrency exchange BitMEX, told Reuters that ever since the ICO ban, there have been concerns about the government’s next step. “If this turns out to be true, then this sell-off is substantiated, and we could see further downside over the weekend, as it could mean the large bitcoin/Chinese yuan exchanges will need to halt trading,” he said.

Bitcoin dropped to a low of $4,227 on the Bitstamp platform. On Sept. 2, it hit a record of close to $5,000.

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