BEIJING — Chinese authorities plan to shut down domestic bitcoin exchanges, delivering a final blow to a once-thriving industry of commercial trading for virtual currencies, which took off inside the mainland four years ago.
The country’s central bank has led a draft of instructions that would ban Chinese platforms from providing virtual currency trading services, according to people familiar with the matter. The move comes after months of scrutiny by Beijing, including a ban last week in China on initial coin offerings, a kind of fundraising via virtual currencies.
Regulators in China have been investigating the domestic market for bitcoin BTCUSD, -1.18% and other virtual currencies since the beginning of the year. For a while, officials considered enacting anti-money-laundering rules on exchanges, even circulating a draft of such rules for them to follow.
But the stakes for Beijing grew as prices of virtual currencies like bitcoin soared, adding to the risk of further speculation by domestic investors. Analysts and investors say one reason bitcoin prices rose last year was that Chinese people began using the asset as a way to bet that the value of the yuan would fall. Virtual currencies in theory can allow holders to bypass the traditional banking system to move money outside of China’s capital-controlled borders.