SHANGHAI: China is expected to issue tougher measures to intensify the crackdown on illegal mining and trading of virtual currencies, after the central bank reinforced a ban on related services provided by financial institutions, experts said.

       Regulations to prevent speculation on virtual currencies should be implemented before markets are disrupted, they said. Cross-border cooperation on regulation of the currencies may also be needed after sharp sell-offs of the world’s major cryptocurrencies in recent days.

       The price of bitcoin, the world’s largest virtual currency, dropped to US$32, 920 (RM137, 095) at noon on Tuesday, down by nearly 50% from its peak in April. It hit a two-week low of US$32, 350 (RM134, 722) late on Monday. Ether also plunged by 13% to US$1, 950 (RM8, 121) before regaining some ground on Tuesday.

       The price drops of the major cryptocurrencies followed a statement from the People’s Bank of China, the central bank, on Monday. It urged commercial banks and payment platforms to stop services related to cryptocurrency trade and speculative investment.

       Central bank officials recently had regulatory talks with five large commercial banks and Alibaba’s Alipay. The banks are the Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, Postal Savings Bank of China and Industrial Bank Co Ltd, according to the statement.

       The banks and Alipay all expressed their commitment to tightening supervision of fund transfers and forbidding some services, including payments and settlements, related to cryptocurrency trading and initial coin offerings.

       Dong Ximiao, chief researcher at Merchants Union Consumer Finance, said Chinese regulators should take targeted measures to crack down on illegal mining and trading of virtual currencies.

       Financial regulators should cooperate more with judicial departments to deal with financial institutions involved in virtual currency trading, said Dong. He stressed they should stop all bitcoin mining in the country.

       International cooperation on regulating virtual currencies also needs to be strengthened, which will require sharing information, Dong said. — China Daily/ANN