Bitcoin’s buzz is gone, for now. It was crushed by the heavy-handed intervention of the Chinese government, which is cooling off investor enthusiasm for the digital currency.

That’s just the beginning rather than the end of recent efforts by big governments around the world to turn Bitcoin back into what once was -- an exotic currency for the tech savvy and romantic radicals, as we wrote in a previous piece here.

The news out of China about Bitcoin and other cryptocurrencies is going from bad to worse. After banning Initial Coin Offerings (ICOs) early in the week, Beijing is now considering shutting off cryptocurrency exchanges, sending the major players into another tailspin.

Coin/Investment Trust Change 24H*

Bitcoin (BTC) -9.84%
Ethereum (ETH) -21.74
Litecoin (LTC) -24.92
BitConnect -32.10

*As of Monday September3 at 2 pm

Source: Coinranking.com

Coin/Investment Trust Change 24H*

Bitcoin (BTC) -9.66%
Ethereum (ETH) -11.22
Litecoin (LTC) -16.92
BitConnect -7.81
*As of Friday September7 at 9 pm

Source: Coinranking.com

To be fair, Chinese and other governments, big and small, have a few good reasons to step in and regulate the process of creating and exchanging cryptocurrencies, as they do with the issuing and trading of conventional financial products and instruments -- to protect the public from market manipulation; and to ensure financial stability.

But shutting off ICOs and cryptocurrency exchanges altogether, as China is doing, goes beyond traditional regulation. It questions the very legitimacy of Bitcoin, and its prospects for gaining broad acceptance as medium of exchange, an asset, and a means of different payments. To become money, that is, like national currencies.

For a good reason: governments do not want to see competing currencies. They threaten their monopoly to create money and control the financial system and the economy.

Actually, the reason China is the first big government to take such action isn’t an accident. China more than any other country wants to have firm control of its banking system, and allocate credit according to a political agenda. This means that a competing currency like the Bitcoin would threaten its political system. Why not crush it sooner than later?

While it is still unclear whether the Chinese government will achieve its real objectives, one thing is clear: the buzz for the digital currencies is gone, at least for now.