The price of bitcoin slumped to a two-week low, after China's central bank urged commercial banks and payment platforms to stop services related to cryptocurrency trade and speculative investment.
Bitcoin, the world's largest virtual currency, dropped to $32,920 at noon of Tuesday, down by nearly 50 percent from its peak in April. It hit a two-week low of $32,350 late on Monday. Ether also plunged by 13 percent to $1,950 before regaining some ground on Tuesday.
Price drops of major virtual currencies followed an announcement from the People's Bank of China, the central bank, saying to ban cryptocurrency services. Financial regulators had regulatory talks recently with five large commercial banks and Alibaba's Alipay.
Those banks are: Industrial and Commercial Bank of China, the Agricultural Bank of China, the China Construction Bank, the Postal Savings Bank of China, and the Industrial Bank Co Ltd. They and Alipay all posted responses late on Monday to tighten supervision on fund transfers and forbid services, including payment and settlement, related to cryptocurrency trading and initial coin offerings.
The PBOC said in the announcement that virtual-currency speculation disrupts the normal economic and financial order, enhances the risks of illegal and criminal activities, such as illegal cross-border asset transfer and money laundering, and seriously infringes on the safety of people's property.
The central bank also urged financial institutions to investigate and identify the accounts of virtual currency exchanges and over-the-counter traders, and promptly cut payment channels for virtual-currency trading.