To decrease the spams and illegal projects to be undertaken by the merchants and end users obviously. That's the main reason why china is banning ICO in first place and then now it's going to regulate the BTC. The main reason for btc ban should be the same as not to get scammed and illegal projects development. They might be thinking that this creates the problem with nation economy as people are putting big money into crypto world.
China has incredibly strict fiscal controls on its citizens. Bitcoin allowed them to circumvent those controls. It's not about money laundering, it's about fiscal control. China wants all the control.
That's my feeling as well. Capital flight was always a concern for the Chinese government in the context of Bitcoin, but until recently, the markets were small enough that they didn't feel the need to take action. The proliferation of so many large ICOs so quickly probably sped things along.
It seems crazy to think that they could actually prevent their citizens from obtaining and using cryptocurrencies. But with the recent moves to crack down on VPN usage, it seems like they really think they can control how Chinese people use the internet (and internet money).
