Chinese authorities have reportedly chose to ban the trading of Bitcoin and other cryptocurrencies on domestic exchanges, the Wall Street Journal reports. It still will allow for over-the-counter transactions. "The virtual currency itself is not the problem, but the illegal behaviours that the virtual currencies enable are where the problems lie", he said.
The Central Bank has not issued an official statement on the matter, but Bloomberg and the Wall Street Journal verified Caixin's report via their own sources.
Bitcoin was trading lower by around 1.3 percent at $4,170 on the Bitstamp platform on Monday. With China being such a huge country, and one of the biggest Bitcoin miners in the world, it's no wonder that the price dropped significantly.
On September 4, China's Central Bank banned ICOs (Initial Coin Offerings) citing that ICOs have "seriously disrupted the economic and financial order". The company raises funds for their ventures while users gain a share of the profits in the future when the company will re-buy its tokens.
Despite the concerns, ICOs have become the hottest thing in the world of virtual currencies and have helped companies raise billions of dollars. On Sept 2, it hit a record high of almost $5,000. The decision impacted trading prices for nearly all virtual currencies.
"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 USA dollar price of bitcoin would catch up to where it's trading equivalently in China", he said.
China's looming ban on virtual currency trading won't affect the global market as exchanges based in other countries will continue to operate. On Monday, bitcoin was up by 6.5 percent at 25,253 yuan ($3,871.67) on the Huobi platform.