Bitcoin plunges on China’s reported moves to shut domestic exchanges

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Barely a week after bouncing back from a price plunge following the ban on ICOs, Bitcoin is being battered again with reports that Chinese authorities are planning to close digital currency exchanges in the country.

Chinese business news outlet Caixin reported on Friday that financial regulators have decided to stop cryptocurrency trading on domestic exchanges, although over-the-counter transactions will still be allowed.

Though unconfirmed—the People’s Bank of China has yet to make an announcement—the report has prompted some exchanges to suspend trading, while investors rushed to sell their cryptocurrencies for cash. The price of Bitcoin dropped to $4,100 level on Monday, according to Bitcoin.com data. Bitcoin Cash, on the other hand, is currently holding at $531, according to CoinMarketCap.com.

OKCoin, BTC China and Huobi, which are considered to be China’s three biggest exchanges, announced on their websites that they have yet to receive a notice from the regulatory body. However, if the report is true, BTC China said it will stop offering bitcoin to RMB transactions on its platform.

“Bit Coin China, as a Chinese enterprise, to comply with the local regulatory policy is the basic principles of business operations. If the report is true, we will firmly support the regulatory policy… and resolutely protect the customer’s asset security,” BTC China said.

The news of a possible exchange ban comes as China attempts to minimize financial risks ahead of a key Community Part leadership reshuffle in October. The order is in line with Beijing’s efforts to eliminate money laundering and choke off capital outflows. In February, major digital currency exchanges in China stopped Bitcoin withdrawals on their respective platforms while they improve their anti-money laundering capabilities to prevent “illegal transactions” as part of the requirements set by the Chinese central bank.

The exchange ban, however, is unlikely to have lasting impact on the global price of cryptocurrencies, according to Jon Holmquist, marketing manager of bitFlyer USA.

“While it may appear to be negative news, I think that Bitcoin has expanded far beyond a single country at this point,” Holmquist said. “I think that ultimately a single country’s decisions for or against Bitcoin won’t ultimately affect the price in the long term.”