The People's Bank of China (PBOC), the country's central bank, began Wednesday to dispatch on-site inspection teams in conjunction with the Beijing Municipal Bureau of Financial Work to investigate the practices of Bitcoin exchanges, according to a statement on the website of PBOC.
The group will conduct inspections to determine whether major Bitcoin exchange platforms, including huobi.com and OKCoin, have complied with financial regulations involving foreign exchange management and provisions against money laundering, said the statement.
An employee at OKCoin confirmed the news, said domestic news portal china.com. "Everything is running normally in the platform, and the company is actively cooperating with the central bank's investigation," the employee told china.com.
Immediately after the announcement, Bitcoin prices on major trading platforms tumbled more than 7 percent to below 5,800 yuan ($837.11).
Bitcoin market has been volatile in the past days. The price of Bitcoin melted down after climbing to a 3-year high of 9,000 yuan by 1:10 am January 5. It slid 25 percent to about 6,000 yuan, according to the Xinhua News Agency.
The volatility, as well as an increasing incidence of reported Bitcoin trading fraud, drew Chinese regulators' attention.
According to a report on Tuesday by the Securities Times, government bodies have also started talks with business insiders about the possibility of setting up a third-party trustee financial platform to ensure the safety of Bitcoin transactions.
