A senior executive at China's Internet finance body has urged Chinese regulators to create a tougher framework of regulations to support the development of digital currencies amid Beijing's crackdown on trading on virtual tender such as bitcoin. Some Indian techies living abroad are said to trade in the digital currency to benefit from the arbitrage on values, buying bitcoins in overseas exchanges and selling them locally at higher prices. 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 newspaper said the Beijing city regulator held talks with crypto-currency exchanges in the city on Friday.
"It's here to stay because of the disparity between countries where a monetary system is robust and countries where there is virtually no monetary system, this comes up as an alternative currency", Levitt said.
Both exchanges said the decision to cease trading was triggered by an announcement by Chinese authorities last week banning initial coin offerings (ICOs), in which companies issue "digital" tokens similar to shares in exchange for bitcoin or other cryptocurrencies. Bitcoin's value tumbled 15 percent on Thursday to about $3,300.
Bitcoin is increasingly in the spotlight around the world.
Despite the sudden doom-and-gloom attitude towards Bitcoin, the current crash is likely just a blip in long term outlook for the currency.
China has emerged as the leading force in bitcoin trading in recent years. However, traders are using cryptocurrencies to circumvent financial regulations. When they stepped up their oversight of bitcoin trading this year, it led to a rapid and substantial drop in trading volumes.
The price of bitcoin has fallen 38% since the beginning of this month as Chinese authorities are tightening their grip on cryptocurrencies. Between June and mid-July, bitcoin prices fell 33%, largely due to fears surrounding the eventual upgrade of bitcoin's software code and branching out of the Bitcoin Cash. In fact, a number of Chinese Bitcoin exchanges are already closing.
The information coming from China paints a bleak picture.