Bitcoin crashes after Chinese exchange halts trading

Singapore - Bitcoin fell for five days, the longest losing streak in more than a year, after one of China’s largest online exchanges said it would stop handling trades by the end of the month amid a government crackdown on cryptocurrencies.

BTC China will immediately stop accepting new account registrations on its BTCChina Exchange, Chief Executive Bobby Lee said Thursday in a tweet. The decision was made after “carefully considering” the September 4 announcement by Chinese regulators that outlawed initial coin offerings, he said.

The cryptocurrency has slumped as much as 27 per cent since September 7. It had risen more than four-fold this year amid greater acceptance of the blockchain technology that underpins the exchange method, global political uncertainty and increased interest in Asia.

China accounts for about 23 per cent of bitcoin trades and is also home to many of the world’s biggest bitcoin miners, who use vast amounts of computing power to confirm transactions in the digital currency.

The communist nation plans to ban trading of bitcoin and other virtual currencies on domestic exchanges, Bloomberg News reported on Monday. The ban will only apply to trading of cryptocurrencies on exchanges, according to people familiar with the matter, who asked not to be named because the information is private. Authorities don’t have plans to stop over-the-counter transactions, the people said.

Shanghai Financial Service Office has also ordered to close down bitcoin trading platforms in the city, China Business News reported, citing an unidentified per- son.

While Beijing’s motivation for the exchange ban is unclear, it comes amid a broad clampdown on financial risk in the run-up to a key Communist Party leadership reshuffle next month. Bitcoin’s surge has fueled concerns of a bubble, prompting skeptics from JPMorgan Chase & Co’s Jamie Dimon to billionaire investor Howard Marks to warn of a looming crash.

Matt Roszak, the chairman of Washington-based Chamber of Digital Commerce, an industry advocacy group, and an investor in BTC China, said he anticipates that the exchange will resume operations by the end of the year.

“That is the expectation based on months of discussions - the timing of which may be impacted a bit with the ICO phenomenon,” Roszak said in an email. “China is preparing to provide licensure for less than a handful of exchanges as it grapples with the meteoric increase in cryptocurrency trading, and speculation on ICOs - licensure and engagement with government will help propel this industry forward.”