The price of Bitcoin plunged by around 50 percent after BTC China, the world's largest Bitcoin trading platform, announced a ban on yuan deposits, following restrictions imposed by China's central bank (PBoC).

Bitcoin, the digital currency, has been surrounded by a lot of controversy since it was introduced in 2009. Bitcoin has also been scrutinized for its use in illegal activities.

In late November this year, Bitcoin was trading at $1200 but plummeted by over 50 percent and went lower than $600 before stabilizing to near $800. However, following the announcement from BTC China, the value has dropped to nearly $550.

On Wednesday, December 18, the People's Bank of China (PBoC) confirmed that it has ordered third-party payment providers to stop using the virtual currency. China's central bank has ordered third-party payment agencies to stop any "custody, trading and other services" related to Bitcoin. Trading platforms have also been told to end working relationships with virtual currency exchanges before the Chinese New Year, which starts at the end of January.

Per reports, Zhou Jinhuang, the deputy director of payment clearance at PBoC, had a meeting with over 10 third-party payment platforms and confirmed the decision.

Bobby Lee, the CEO of BTC China, confirmed that he has received a notice from his third-party payment processor regarding PBoC's orders. Lee also said that BTC China will now stop accepting deposits in Chinese yuan.

"They essentially have cut us off from allowing customer deposits into BTC China's bitcoin exchange," said Lee. "Customers don't have to worry, the deposits are still here, the withdrawals will still be allowed. So there's no need to panic on that."

Lee said the Chinese government authorities do not feel that Bitcoin is assisting people to take yuan out of China.

"Bitcoin exchanges are legal...so our business model is still valid but we're under some pressure in terms of being able to work with third-party payment companies. So we're looking for alternatives," added Lee.