China comes down hard on cryptocurrencies as it seeks to rein in market prone to excesses

China’s latest cryptocurrency-crackdown is already claiming its first casualties.

At least five local exchanges have halted operations or announced they will no longer serve domestic users this month, after regulators issued a series of warnings and notices as part of a clean-up of digital currency trading.

China’s stepping up scrutiny of its massive cryptocurrency industry just weeks after President Xi Jinping ignited a market frenzy by declaring Beijing’s support for blockchain technology. Financial watchdogs including the Chinese central bank have in past weeks ordered cryptocurrency firms to shutter and warned investors to be wary of digital currencies, seeking to rein in a market prone to excesses. Weibo, a Chinese Twitter-like service, suspended accounts operated by major exchange Binance Holdings and blockchain platform Tron.

Taken together, the latest wave of shutdowns and restrictions represent the biggest clean-up of the sector since an initial Chinese clampdown in September 2017. Although exchanges that allow users to buy bitcoin and Ether with fiat money were banned, trading had remained rampant in China through over-the-counter platforms or services that deal with crypto assets only.

Now, even those alternatives have succumbed to regulators, spooking investors. Bitcoin this week sank to its lowest level in six months at the end of its longest losing streak since at least 2010. The largest cryptocurrency recovered with a 6 per cent rebound on Wednesday but is still poised to post its worst month since November last year.

Twenty of the top 50 crypto exchanges are based in the Asia-Pacific region and accounted for about 40 per cent of bitcoin transactions in the first half of the year, according to data from Chainalysis. Within the region, the most exchanges are in China, the research firm found.