News has emerged that Chinese regulators have agreed on a "comprehensive ban" on buying or selling of virtual currency. The People's Republic of China is cracking down on Bitcoin trading. The Wall Street Journal reported that at a recent private meeting in Beijing, officials notified industry executives about mainland restriction to foreign bitcoin exchanges. The decision is read as a way to seize back control of the country's money supply. Jim Stent, author of China's Banking Transformation predicts that the crackdown is "part of this larger multi-agency program to reduce financial sector risk, which will unfold over months and probably years" and that it will most likely be a permanent action.

The crackdown on bitcoin is seen as a much larger and impactful regulatory action than those that China has taken previously. However, this is not the first time that China has worked to control financial speculation by restricting cryptocurrency exchange. In 2013, the People's Bank of China banned its banks form using bitcoin and even earlier this year, the Central Bank placed a probe into local bitcoin exchanges. Ultimately, many people see this action as a way for the 19th Party Congress to gain back control. Bill Bishop, head of The Sinocism China Newsletter, believes that the ban is "probably good for bitcoin because it removes the Chinese risk factor."

Keep in mind that even though China has placed a ban on Bitcoin, many traders will still be able to use over-the-counter platforms such as Telegram (which ensures privacy). However, this would not be available to all traders because Telegram is blocked in China and requires a VPN in order to be accessed; not all are familiar with this technology.

Although the People's Bank of China has publicly expressed support for the blockchain technology (public ledger of all cryptocurrency transactions) that is behind bitcoin, it eyes it with suspicion. Particularly, this is because bitcoin can circumvent capital controls. With anxiety regarding the state of the country's economy from 2014 continuing through 2016, government leaders tried to defend the yuan's value and cryptocurrency such as bitcoin prompted massive capital flight.

As a result of China's most current actions to crackdown on digital currency, bitcoin prices took quite a tumble. Last week, bitcoin started off strong, coming back from its crash on September 15th to below $3,000. Two days later, bitcoin stabilized to $3,500 and on September 18th it rose above $4,000. And on Friday, September 22nd, bitcoin was trading close to $3,900 and in the afternoon it went down to $3,600. Currently, it is not particularly clear as to what is driving the bitcoin prices down; however, it is important to closely follow trader reactions to the news.

Although a US cryptocurrency ban is not likely to happen, there is a visible increase in regulatory scrutiny of the cryptocurrency economy because of its recent rise in popularity. It also doesn't look like other will follows China's lead and this could possibly play into whether the ban is a temporary or permanent action.