He warned as well of possible value fluctuations even during the course of a transaction. Chinese exchanges that handle this currency are facing challenges and many have been struggling or have even shut down.

The currency's value has plummeted from a peak of more than $1,000 to about $600, according to BTC China.

Leon Li, founder of huobi.com, another major bitcoin trading platform in China, said its daily transactions have fallen to a fraction of what they were a couple of months ago.

Some bitcoin traders and exchanges are waiting to see what happens, while others are looking to expand abroad or providing bitcoin wallets, both of which are difficult and very competitive segments.

Kapron noted that regulators and the Chinese government have had to balance opening up the industry, while at the same time not risking the stability of the financial industry or the economy as a whole.

"The stance regulators are taking is like 'crossing the river by feeling the stones', because the banking industry is still very young and is going through a hard time with capital issues as a whole," he said.

"If it's opened up completely, the economy will quickly follow and expose risks of collapse."

China becomes largest Bitcoin market	Bitcoin rollercoaster hits China, challenging supervision