A senior official from the People’s Bank of China (PBOC) — the country’s central bank — suggested Chinese authorities should impose a complete ban on the trading of cryptocurrencies over centralized exchanges, and also ban all businesses and individuals that provide associated services. PBOC Vice Governor Pan Gongsheng made these comments at a meeting between policymakers and internet regulators last week, according to Reuters.

Citing an internal memo from the meeting, the news agency said Pan’s suggestions were based on the need to “prevent the build up of risks in that market.” Other than centralized trading, Pan also reportedly called for a ban on enabling services, such as online wallets that allow people to store virtual currencies.

Centralized trading refers to trading on an exchange where assets are bought and sold based on prices listed on the exchange, with the actual assets being transferred through a clearing house. In the case of cryptocurrencies, the exchange platform is the clearing house.

“The financial work conference clearly called for limiting ‘innovations’ that deviate from the need of the real economy and escape regulation,” Pan said, according to Reuters.

China is among the biggest bitcoin mining hubs in the world, but Chinese authorities cracked down on virtual currencies in 2017, outlawing initial coin offerings, shutting down local exchanges and limiting mining activity. The main threat is seen as the potential for a bubble in the sector, and its disconnectedness with the real economy.

“Pseudo-financial innovations that have no relationship with the real economy should not be supported,” Pan said.

Cryptocurrency Models of bitcoins in Hong Kong. Photo: Anthony Wallace

And that is why the world’s second-largest economy (and Asia’s largest) could cooperate with neighboring Japan and South Korea over regulation of cryptocurrencies. South Korea, which is a global hub for cryptocurrency trade, has called for cooperation between the three countries to regulate the industry.

South Korea has been considering a number of measures to control the cryptocurrency market in a country where between 3 and 4 percent of the entire population is thought to hold some amount of bitcoin. The country’s justice minister Thursday proposed a ban on exchanges similar to Pan’s, but his comments were made publicly, immediately driving down the price of bitcoin. But somewhat contradictory comments by the finance minister, who said the next day the government would hold more consultations before making any such decision, helped the price upward.

But, South Korean Finance Minister Kim Dong-yeon was speaking Tuesday on a local radio program, where he said the ban was still very much under consideration.

“The government stance is that it needs to regulate cryptocurrency investment as it is a largely speculative investment. The shutdown of virtual currency exchanges is still one of the options (that the government has). … We are also tinkering with the option of levying taxes,” Kim said, according to Yonhap News Agency.

Following these reports, the price of bitcoin — which was almost at $15,200 a week ago — was struggling to stay above $13,000 Tuesday morning, after falling to a low of below $12,800, according to prices compiled by Coindesk.