Chinese authorities carried out inspections of bitcoin exchanges in the country amid concerns over possible market manipulation, money laundering, unauthorized financing, currency conversion and other activities.
The Shanghai and Beijing branches of the People’s Bank of China (PBoC) announced that they conducted spot inspections of the major exchanges of bitcoin, the Wall Street Journal reports.
The inspections took place after warnings by the PBoC last week about the risks associated with bitcoin trading and come as authorities seek to curb capital outflows and ease pressure on the yuan.
Following the news of the PBOC inspections, bitcoin dropped more than 13 percent against the dollar on Wednesday, according to the Journal.
The virtual currency surged last year, and the major exchanges have claimed that China accounted for more than 90 percent of its global trading.
In recent months, Beijing has tightened capital controls, making it more difficult for companies to invest overseas and for individuals to convert their yuan funds into foreign currencies.
With bitcoin trading increasingly popular among Chinese investors, regulators are trying to close what analysts say is a channel that could contribute to more outflows.
Over the past few years, China has become a hub for bitcoin.
Three of the largest exchanges are located in the country, which is also home to the largest “miners”—businesses that process transactions and maintain the network in return for newly minted bitcoin, the Journal noted.
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