When the Chinese government announced a ban on initial coin offerings last week, it looked like an attempt to rein in the speculative excesses of the cryptocurrency economy. The value of Bitcoin, the granddaddy of all cryptocurrency, also shot up significantly this year. This is far below the all-time high of $5,013.91 set earlier this month.
The news of China's crackdown on cryptocurrency fundraising didn't immediately cause a panic, but it put the China-based cryptocurrency exchanges on notice, and following "careful consideration", one of China's largest exchanges made a decision to call it quits.
This week the Reserve Bank of India (RBI) also said that it was not comfortable with Bitcoin and has a group looking into cryptocurrencies as legal tender. The cost of the bitcoin declined to 26,400 Yuan (almost to $4,029) on BTC China this week compared to 32,500 Yuan of last week. The lack of any central authority makes bitcoin remarkably resilient to censorship, corruption - or regulation.
While there is lots of speculation, TechCrunch has confirmed with two sources with knowledge of developments that government officials have visited a number of top exchanges to instruct that they cease trading services on Chinese soil soon.
On September 14, 2017, reports surfaced that BTCChina (BTCC), a Shanghai-based cryptocurrency exchange, had announced that, effective September 30, it would suspend trading in China. As for exchanges' prices, Bitcoin is trading at about $2904.64 on OkCoin, $2887.97 - on Huobi, and $2908.37 - on BTCC at press time.
But the value of Bitcoins came under pressure this week when Jamie Dimon, the chief executive of the biggest U.S. bank, JP Morgan, warned that the digital currency was "a fraud" that would "eventually blow up". Trading dwindled after regulators tightened controls and warned the currency might be linked to fraud.
Levitt said he would avoid investing directly in bitcoin due to its wild price fluctuations that are "hard to understand". As a result, the total value of al cryptocurrencies is already at $116.5 billion, after falling below $100 billion earlier today. Important to note, however, and according to Business Insider, the country will continue to allow over-the-counter transactions.
The Chinese government's clampdown on cryptocurrencies has not only sent bitcoin tumbling, it is also hitting the shares of related companies. "Even the apparent ban on ICOs seemed to be more of a stopgap in order to get some policies in place", English said.