China has introduced new regulations to identify and control risky currency activities, including those involving cryptocurrencies, the South China Morning Post reported.
According to the report, China’s State Administration of Foreign Exchange recently ordered banks to monitor and report suspicious transactions related to cross-border gambling, underground financial networks and unauthorized crypto transactions.
The new rules require banks to track the identities of the individuals and entities involved, their sources of funding and trading patterns.
Legal experts see these measures as a further restriction of crypto trading within the country. Liu Zhengyao, a lawyer at ZhiHeng law firm, reportedly noted that these rules deepen China’s regulatory arsenal against crypto, reinforcing the government’s intention to control the industry.
China’s crypto relationship
While the latest measures reflect China’s strict stance on crypto, they highlight the government’s nuanced approach to the broader industry.
Over the years, the Asian country’s government has imposed strict regulatory measures on commercial crypto activities such as Bitcoin trading and mining as it views them as potential threats to financial stability.
However, recent developments indicate a growing recognition of the importance of the sector.
In its 2024 Financial Stability Report, the People’s Bank of China (PBOC) recognized Hong Kong as a leader in crypto regulation. The report also highlighted the importance of developing robust frameworks for the supervision of digital assets and aligning them with global efforts.
Moreover, a Chinese court previously ruled that owning cryptocurrencies is legal. However, it is emphasized that its use is strictly limited to personal property or goods, and not as a payment method or investment vehicle.
Despite recognizing the sector’s potential, Chinese regulators remain cautious. They warn that expanding cryptocurrency adoption in payment systems and retail investments could pose risks to financial systems.
