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China to get even tougher on bitcoin trading

Chinese regulators are preparing the biggest crackdown on the cryptocurrency to date.

bitcoin

Bitcoin's lack of government backing and regulation has led to volatility.

Science Picture Co.

China is clamping down even more on bitcoin trading, as it prepares to shut down all digital token exchanges, according to a report from The Wall Street Journal.

The plan, which regulators revealed to cryptocurrency executives on Friday during a private meeting in Beijing, is the biggest step the country has taken so far to shut down trading of the virtual currency. Earlier this month, regulators banned commercial exchanges trading bitcoins and other digital tokens. But last week's meeting signaled the government is looking to put a halt to all bitcoin trading, including peer-to-peer trading, which allows individual traders to find each other on the internet and trade digital tokens.

Since its founding in 2009, bitcoin has made a name for itself by allowing for anonymous transactions. The digital currency is now accepted by more than 100,000 merchants worldwide, including Microsoft, Dish and Subway.

But its lack of government backing and regulation has led to volatility. As its valuation has skyrocketed, it's attracted the attention of investors. But security concerns and the potential for scams, has made regulators in several countries uneasy, including the US Securities and Exchange Commission. This summer the SEC called for bitcoin and other virtual currency trading to be regulated like other securities.

Now China, which the Journal reports has digitized its financial sector faster than any other nation, is pulling back as well.  China's crackdown on bitcoin is the most widescale attempt by any country to control the cryptocurrency, according to the Journal.

Chinese regulators see bitcoin and other virtual currencies as a potential threat to the yuan. The regulatory crackdown also comes as China's top leaders battle money laundering, as the country prepares for a leadership transition this fall, the Journal reports. 

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