The exchange ban is unlikely to have a major impact on the prices of cryptocurrencies because venues outside China will continue trading, according to FBG Capital's Zhou.
This week's ban will reportedly apply to trading cryptocurrencies on exchanges, but won't stop over-the-counter transactions.
The news report by Caixin read, "Chinese regulators ordered a halt to all virtual currency trading platforms in the country, acting to further rein in risks related to cryptocurrencies, Caixin learned from a source close to regulators".
"Trading volume would definitely shrink".
In a move that could severely affect the whole cryptocurrency industry, Chinese authorities are now planning to shut down domestic bitcoin exchanges across mainland China. "Old users will definitely still trade, but the entry threshold for new users is now very high".
The bitcoin and ethereum prices were hit hard over the weekend as there were reports from China that said that the regulators were about to go after the bitcoin exchanges next and ban them totally within the next few days.
One of bitcoin's biggest influencers, Crypto Compare's Charles Hayter, said to CNBC recently that for China "nothing is ever certain" when it comes to cryptocurrencies. Bitcoin has shot up around 600 per cent in dollar terms over the past year, which has stoked fears of a bubble. As regulations tightened, China's share has slid to less than 30%.
Huobi, OKCoin and BTCC, the three leading bitcoin exchanges in China, have all stated that they do not believe the ban will be approved and are not even sure if it is the actual plan of PBoC.
According to the The Wall Street Journal, bitcoin exchanges are now being clamped down on, with no trading to be done within Chinese borders.
China's influence on global markets is not restricted to just traditional currencies, with the country's biggest exchanges accounting for a fifth of all transactions over the course of the past month.
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