Trading volume on China's major Bitcoin exchanges has plunged in the past week, since authorities tightened regulation of the digital currency.

BTCChina, Huobi and OKCoin, the country's three major Bitcoin trading platforms, have seen their daily transaction volume tumble from around 20,000 last week to around 6,000 at Tuesday's close. Bitcoin prices -- between 6,700 yuan (980 U.S. dollars) and 6,800 yuan on Tuesday -- are down by more than 10 percent.

The fall came after China's central bank warned exchanges last week against margin trading and money laundering, which was swiftly followed by withdrawal of some business on the exchanges.

Bitcoin, without ties to any bank or government, is underpinned by blockchain technology, a digital ledger system. It allows users to spend and transfer money anonymously, a handy tool for money laundering and capital flight.

Exchanges also offer margin trading, which allows investors to trade Bitcoins using borrowed funds to capitalize on price fluctuations but which also amplifies risk. The collapse in trading volume was mainly due to the end of margin trading, said Zhao Yao, a researcher with the Chinese Academy of Social Sciences.

Zhao warned that margin trading, by its nature highly leveraged, could stoke speculation, and only better regulation will avoid liquidity strains.

The value of Bitcoins surged in the second half of 2016 but plummeted after surpassing 8,000 yuan (1,165 U.S. dollars) per unit early in January.

Source: Xinhua