January 02, 2025<\/p>\n\n\n\n
By Our Correspondent<\/p>\n\n\n\n
China’s foreign exchange authority has introduced new regulations mandating banks to identify and report high-risk trading activities, including those related to cryptocurrencies. This development is expected to complicate the ability of mainland investors to engage in the buying and selling of bitcoin and other digital currencies.<\/p>\n\n\n\n
According to the announcement made by the State Administration of Foreign Exchange last week, banks are tasked with monitoring and reporting on “risky foreign exchange trading behaviors.” This includes activities associated with underground banking, cross-border gambling, and illegal financial transactions involving cryptocurrencies.<\/p>\n\n\n\n
The regulations apply to local banks throughout mainland China and require them to track these activities based on various criteria, including the identities of the involved institutions and individuals, the origins of funds, and the frequency of trading.<\/p>\n\n\n\n
Furthermore, banks must implement risk-control measures that encompass these entities and limit the provision of certain services to them, as stated by the regulator.<\/p>\n\n\n\n
These new regulations illustrate Beijing’s ongoing commitment to stringent oversight aimed at eliminating commercial cryptocurrency operations, such as bitcoin trading and mining, which are perceived as potential threats to the nation’s financial stability. Liu Zhengyao, a lawyer at ZhiHeng law firm in Shanghai, commented in a WeChat post last week that “the new rules will provide another legal basis for punishing cryptocurrency trading.”<\/p>\n\n\n\n
He further indicated that it is likely that mainland China’s regulatory stance on cryptocurrencies will continue to become more stringent in the future. The utilization of the yuan for purchasing cryptocurrencies prior to converting these digital assets into various foreign fiat currencies may be classified as \u201ccross-border financial activities involving cryptocurrencies\u201d under the newly established foreign exchange regulations, particularly if the transaction amount surpasses the legally permitted limit, as stated by Liu.<\/p>\n\n\n\n
According to Liu, the new regulations will render it \u201cincreasingly challenging in the future to circumvent the nation\u2019s foreign exchange laws through cryptocurrency transactions.\u201d<\/p>\n\n\n\n
In 2017, Beijing initially prohibited initial coin offerings and mandated the closure of cryptocurrency exchanges. This crackdown intensified in 2021, culminating in a ban on bitcoin mining and the declaration of all crypto-related enterprises as illegal.<\/p>\n\n\n\n
A significant surge in bitcoin prices, driven by Donald Trump\u2019s favorable stance towards cryptocurrencies and his victory in the US elections, has led numerous experts in China to advocate for a relaxation of Beijing\u2019s stringent policies regarding these digital assets.<\/p>\n\n\n\n
Nevertheless, the Chinese government has not signaled any intention to ease regulations or liberalize this sector.<\/p>\n\n\n\n
In August 2024, the Supreme People\u2019s Court ruled that the use of cryptocurrency for the transfer or conversion of illicit proceeds constitutes a violation of Chinese criminal law, thereby increasing legal risks for traders.<\/p>\n\n\n\n
In 2023, the Supreme People\u2019s Procuratorate and the foreign exchange regulator emphasized the need for enhanced oversight of foreign exchange trading, particularly in instances where the tether stablecoin was utilized as an intermediary for trading the yuan against other currencies.<\/p>\n","protected":false},"excerpt":{"rendered":"
January 02, 2025 By Our Correspondent China’s foreign exchange authority has introduced new regulations mandating banks to identify and report high-risk trading activities, including those related to cryptocurrencies. This development is expected to complicate the ability of mainland investors to engage in the buying and selling of bitcoin and other digital currencies. According to the […]<\/p>\n","protected":false},"author":4,"featured_media":6957,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-6954","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uncategorized"},"yoast_head":"\n