bitcoinReuters
BTC China, the country's largest bitcoin exchange, has halted local currency deposits to accounts at China Merchants Bank, as lenders close tie-ups with bitcoin exchanges amid rising government regulations to check trading in the popular digital currency.
The move is to ensure security of client funds and stable operations at the exchange, according to BTC China.
Following the development, bitcoin prices fell below $450 (£268, €325) on 27 April. The price continued to decline on 28 April, and is trading down $6.31 at $423.35 as at 6:39am BST, according to Coindesk.
The month's low is $360 on 10 April.
On 25 April, Merchants Bank said its customers would no longer be able to do bitcoin transactions using their accounts at the bank, following the People's Bank of China's ban on digital currency dealings of financial institutions.
"We saw the bank's statement and we took the initiative," BTC China's chief executive officer, Bobby Lee, said.
The suspension has not affected the exchange's operations so far as the exchange can transact funds to clients' accounts at other lenders, according to Lee.
Currently handling more than 75% of bitcoin trades in yuan, BTC China is the biggest Chinese bitcoin trading platform. It is followed by exchanges FXBTC and Bter, with trading shares of about 14% and 8%, respectively, according to Bitcoinaverage.com.
The Chinese yuan represents about 10% of bitcoin trades across the globe, and is the second-most used currency in bitcoin trades after the US dollar. Therefore, investors are closely watching all regulatory developments in China related to digital currencies
In December, the People's Bank of China banned financial institutions from handling transactions in bitcoin, as the central bank was concerned about financial stability amid soaring volumes of digital currency trades in the country.
Subsequently, a number of banks announced that they were withdrawing support to digital currency exchanges.
BtcTrade, a Chinese exchange, earlier said that a branch of the Agricultural Bank of China in Hangzhou would close its account if it continued bitcoin-related settlement services through it.
Other exchanges which announced account closures include Huobi.com and Btc100.org, according to Bloomberg.
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