The reason is because China doesn't allow for the free exchange of its currency with other currencies. They have a pegged exchange rate and manage how much of their currency can move outside of China's borders. That's the reason for the restrictions.
The lack of such restrictions was also probably a big reason for the explosive growth in the value of bitcoin recently. It was basically being used as an end run around those capital controls.

You deposit money to an exchange in yuan to buy bitcoins, then trade the bitcoins for dollars or euros on some other exchange - at least I'm guessing that's how it worked. The article also explains that all they've done is prohibit yuan deposits to exchanges. You can still cash your bitcoins in for yuan on the Chinese exchanges. But it's now a one way street.

Right, but the meteoric rise was global too. Easy come, easy go.

Rest assured, this won't be the last time you see bitcoin or other digital currencies being used for ummm, let's call it 'creative finance.'

I guess lot of you remember e-gold...

I often think people don't realize that the fed doesn't just print money, but they also destroy it - as does the banking system. If you've ever heard the term deleveraging, that's what it really means although I won't bore anyone with an explanation except to say that creating loans creates money and reducing credit destroys it.

That happens somewhat indirectly though. When the federal reserve does it though, it's pretty much in your face. When they buy securities for their balance sheet, they print money to do it. But when they sell those same securities, the money they get simply disappears. Poof. The rabbit goes back into the hat.

It's just that it's been so long since the fed has done any selling that no one really remembers what that's like any more. But the current buying programing, QE infinity as some like to call it, will almost certainly start to wind down soon - at least that is current speculation in financial circles. Some think it might start to happen today, but most think it will be in January or March.

In fact it was just talk of reducing the current program of monthly bond purchases ($85B) back in May that was the main reason for the spike in interest rates. And that wasn't even talk of ending the buying, but just some sort of gentle tapering of the buying.

Not that any of that matters though. The real point is that the fed will eventually HAVE to sell much of the $4T in assets it has on it's balance sheet. The selling probably won't start until 2015 or 16 at the earliest, but sooner or later it has to happen. When it does, the money that people use to buy those assets will just disappear into the void from whence it came.

edit: I just saw they've announced they will start tapering in January, but I haven't read any of the stories yet.