The value of bitcoin has dropped as much as 27% since September 7.
Regulators in Shanghai, the country's financial center, gave verbal instructions to exchange operators to shut down, China Business News and 21st Century Economic Report said on their websites. BTC China has also stopped registering new users, it said in a statement posted on social media. However, the idea of a state-run digital currency is under consideration.
This week at a Delivering Alpha conference, JPMorgan Chase CEO Jamie Dimon called the digital currency "a fraud" and said he would fire any employee trading bitcoin for being "stupid".
Interestingly, the cryptocurrency market has actually picked up following the news.
Following China's ban on initial coin offerings of cryptocurrencies, the Asian country looks set to ban all digital currencies by the end of September. Earlier today, the Bitcoin price (BTC/USD) for the first time in six weeks fell below $3,000, posting double-digit percentage gains over the past 24 hours.
"I understand (China's crackdown) is all about protecting market stability and protecting the interest of investors, so halting these kinds of initial coin offerings is a very necessary action from the regulators", Li said.
There was no immediate word from other Chinese bitcoin exchanges about their plans.
China accounts for about 90 percent of all bitcoin trading on exchanges, and demand for the virtual currency was on the rise.
The Chinese central bank's announcement last week meant that Chinese firms would no longer be able to issue electronic currency units to raise funds.
The past year has seen an astonishing boom in the two most popular cryptocurrencies: bitcoin and ether-the latter being the currency of the Ethereum network. However, the Chinese government is considering creating its own cryptocurrency.
While there is lots of speculation, TechCrunch has confirmed with two sources with knowledge of developments that government officials have visited a number of top exchanges to instruct that they cease trading services on Chinese soil soon.