(Yicai Global) Feb. 13 -- Chinese state-owned news agency Xinhua has recommended in a commentary that the country makes cryptocurrency regulation stricter and cut off access to overseas exchanges until authorities have probed the individuals behind them.

China can ramp up regulation to prevent the loss of sensitive data and avoid risks to safeguard the interests of financial consumers and maintain national security while remaining within the law, it added.  

Current rules prevent trading platforms from carrying out direct transactions between cryptocurrencies and yuan, or facilitating such transactions. However, more than 20 over-the-counter exchanges are still active as they operate through overseas domains in Hong Kong, Japan and the US, the commentary said, citing a report from online finance security experts.

Regulators need to better understand the cross-border flow of virtual currencies so they can make supervision more effective, said Prof. Huang Zhen, head of the Institute of Finance Law at the Central University of Finance and Economics.

Yang Dong, director of the Fintech and Internet Security Research Center at Renmin University, believes China should consider setting up a blacklist for entities and their executives and ban or restrict them from conducting finance-related business.

Seven departments, including China's central bank, prohibited initial coin offerings in September to prevent direct transactions between fiat and virtual currencies. Last month, three more financial bodies sought to further strengthen digital currency regulation.