A senior US Treasury official has urged banks and financial regulators to do more to tighten oversight of trading in bitcoin and other cryptocurrencies.

Sigal Mandelker, the Treasury undersecretary for terrorism and financial intelligence, said Friday (26 January) that more needs to be done to prevent money laundering and other criminal activities using such transactions. Speaking to reporters in Tokyo after visiting China, Hong Kong and South Korea, she lauded recent moves to keep closer tabs on such dealings.

The US considers traders and administrators of cryptocurrencies as "money transmitters" who are required to have strong anti-money laundering and other controls to prevent their use for illegal purposes.It has imposed fines for violations of those regulations.

Financial regulators in Asia have struggled to keep up a boom in cryptocurrency investing.

"We feel very strongly that we need to have this kind of regulation all over the world," Mandelker said. She noted that Japan and Australia are already regulating cryptocurrency trading.

"The EU, I understand, is moving very quickly in that direction and we think it's very important that similar regulations are happening in a number of other countries."

Mandelker said she expects the issue to be discussed at meetings of the Group of 20 industrial economies. She recently told Congress that money laundering related to cryptocurrencies was "an area of high focus" for the Treasury Department.

The price of bitcoin and other forms of virtual money fluctuated wildly over the past month, falling from an all-time high of more than $19,000 per coin in late 2017.

Experts say the media spotlight on cryptocurrency has brought both opportunity and risk. Egor Gurjev, founder of Playkey, a decentralised gaming platform said: "The world of cryptocurrency is going through a seismic change, with governments and regulators starting to act.

"This is making investors nervous and the main reason that trading in cryptocurrencies is especially volatile at the moment. Exchanges and wallet providers are upping their game with more risk warnings and educational material as the market matures, so it is good to see that there's a concerted effort on all sides to educate and try to protect investors."

A number of countries have started to discuss potential regulation of virtual currency, including the UK, Russia and South Korea. UK prime minister Theresa May said this week (25 January) that tighter laws were "very seriously" being considered because of possible links to crime.

Japan, the world's largest market for bitcoin trading, is the only major advanced economy with a licensing system for digital currency intermediaries such as exchanges and payment providers.

It moved to impose order on the gray zone for such dealings after a major trading platform, Mt. Gox, filed for bankruptcy protection, after masses of Bitcoin went missing, worth millions of dollars at that time.

"The Wild West of the crypto-world is evolving and as it continues to move into the mainstream, we can expect further actions from law making and regulating institutions," Gurjev added.

"The key," he continued, "is to ensure that regulation does not become over-burdensome and stifle what is becoming an effective way for business ideas to turn into reality, whilst allowing people to democratically become a part of those businesses and potentially profit from them."

Cryptocurrency spiked in value in the past 12 months David McBee/Pexels