China's central bank comes after Bitcoin

LAS VEGAS, NV – MAY 24: Gamblers play slot machines near a newly-installed Robocoin ATM that accepts Bitcoin at the D Las Vegas on May 24, 2014 in Las Vegas, Nevada. The machine, the first Bitcoin ATM ever placed in a casino, allows customers to exchange Bitcoin into cash and vice versa. The D began accepting the digital currency in January for nongaming transactions. (Photo by Ethan Miller/Getty Images)

China’s central bank, battling to curb capital outflows due to persistent fears over continued weakness in the Chinese yuan, has issued a blunt warning to Bitcoin exchanges that they risked closure should they seriously violate the country’s regulations.

In a statement posted on the People’s Bank of China’s (PBOC) website on Thursday, the bank said it told the exchanges during a meeting held on Wednesday to not to take part in financial activities such as margin lending or allow money laundering.

According to Reuters, the PBOC said that the meeting came amid ongoing checks into Huobi and OkCoin, two of the country’s largest trading platforms, which began last month.

The central bank said at the time that the spot checks were to look into possible rule violations.

Some have speculated that Chinese investors have been investing in the cryptocurrency in order to circumvent capital controls that have recently been tightened to quash continued outflows from the country.

According to data released by the PBOC earlier this week, China’s FX reserves fell below $US3 trillion for the first time in six years during January, sliding by $US12.313 billion to $US2.998 trillion.

Over 2016, the nation’s FX reserves fell by $US320 billion, following an even larger decline of $US513 billion in 2015.

The Chinese yuan fell by 6.6% against the US dollar in 2016, the largest annual percentage decline since 1994. Over the same period the Bitcoin price more than doubled against the US dollar.

Bitcoin daily Chart

You can read more here.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.