In remarks, Vice Premier Liu He, promised to "prevent and control financial risks" to the country's monetary system.
We will "focus on reducing credit risks, strengthen the supervision of platform enterprises' financial activities, crackdown on Bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field," he said according to remarks reviewed by FOX Business.
Bitcoin turned lower on the developments falling below the $37,000 level in what has been a wild week for the sector. Bitcoin was trading above the $50,000 level earlier this week.
The comments also come one day after Federal Reserve Chairman Jerome Powell laid some early guidelines for a U.S. digital currency and separately, on the same day, the Internal Revenue Service signaled crypto assets over $10,000 will likely soon be taxed.
Earlier this week, China's Banking Association delivered a similar warning on digital currencies being subject to great volatility.
The statement said all members should "resolutely refrain from conducting or participating in any business activities related to virtual currencies."
FOX Business' R.N. White and Ken Martin contributed to this report.