(Yicai Global) June 22 -- Five large Chinese banks and Ant Group's mobile wallet Alipay promised to strengthen supervision after the People's Bank of China summoned them for talks about regulation to ban cryptocurrency trading.

Any transactions involving virtual currencies will be blocked, the six financial institutions said in their separate statements yesterday. The group included the four state-owned lenders of Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank, and Postal Savings Bank of China, as well as one large joint-stock lender, Industrial Bank.

Cryptocurrency exchanges have been banned in China since 2017 but many have found ways to still trade the expanding number of online tokens overseas. Since last month, authorities have tightened supervision by targeting Bitcoin mining companies.

Chinese banks and payment institutions must fulfill their obligations by identifying clients, and refraining from offering cryptocurrency services such as account opening, registration, trading, clearing, and settlement, the central bank said in a statement yesterday.

Trading Under the Radar

A recent observation may have sparked the move. The regulatory authority had found out that some of the related parties had failed to stop high-frequency transactions as high as tens of millions of yuan, a person familiar with the matter said to Yicai Global.

"Over-the-counter traders with many pending orders and high-frequency trading are essentially conducting virtual currency exchange business," the same person said to Yicai Global. "Financial institutions cannot provide them with the related services."

Ignorance is not the problem. Even though commercial lenders have tried, their efforts have not been sufficient in monitoring cryptocurrency-related transactions during recent years, according to industry insiders.

Lenders and mobile wallets may not even know they are serving crypto traders as many exchanges overseas bypass supervision by connecting customers around the world to trade virtual currencies directly with each other, industry observer Su Xiaorui told Yicai Global.

The dangers are clear. Virtual currency trading and speculation disrupt the normal economic and financial order, breed the risks of illegal cross-border transfers and money laundering, as well as jeopardize the safety of people's property, the PBOC added.

The anonymity of digital currencies poses a great challenge to banks' anti-money laundering work, Su added.

Editor: Emmi Laine, Xiao Yi