China's top Bitcoin exchange to cease trading

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"We shouldn't be surprised that this threat sparks extreme reactions from the industry's top insiders", he said.

However, not everyone feels that this is the end for Bitcoin exchanges in China.

"The current pricing assumes massive adoption, and I don't think governments will allow the amount of adoption that's now priced in", said Mohamed El-Erian, chief economic adviser at Allianz Global Investors, on CNBC Wednesday morning.

China operates very strict controls on money flowing out of the country.

The collapse extended to as much as 30 percent this week since China began sending stronger signals of a clampdown on September 8, making this the biggest five-day decline since January 2015, when it traded at around $200. Bitcoin, invented by Satoshi Nakamoto in 2009, is commonly known as a decentralised digital currency.

Mr. Dimon told an investor conference in NY that if any of his traders were found trading Bitcoin he would "fire them in a sec", and that Bitcoin was "worse than tulips bulbs", referring to a famous market bubble in the 17th Century.

The bank said under national laws merchants in the country can not accept digital currencies as payment for goods and services, while cryptocurrency exchanges were also not allowed.

China's top Bitcoin exchange to cease trading
China's top Bitcoin exchange to cease trading

"They can become a tool for illegal fund flows and investment deals". Many of these digital assets were traded on bitcoin exchanges. A government source verified it to Reuters.

The news sent bitcoin sliding further, although it has steadied once again.

What Does This Mean for Cryptocurrencies?

A Chinese business news magazine, Caixin, said at one point up to 90 per cent of global trading took place in China.

Exchanges were also told to stop allowing new user registrations as of Friday, according to a government notice. China's ban on such activities will have a massive impact on blockchain transactions. Should other countries do the same, it may spell disaster for cryptocurrencies on the whole.

A United States ban on blockchain transactions is unlikely. Indeed, the SEC could use the move as motivation to scrutinise cryptocurrency exchanges more closely.

But thanks to this more diversified market, and in context, still limited action, it stands to reason that the regulatory interventions of a single country (even the world's most populous country) should have less impact on the bitcoin price over the long term.

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