- China’s foreign exchange regulator announced new rules aimed at tightening oversight of cryptocurrency activities.
- China remains the second-largest holder of Bitcoin globally, owning about 194,000 BTC.
China’s foreign exchange authority has introduced stringent regulations for cryptocurrency operations.
The new directives mandate banks to diligently track and report potentially hazardous transactions, especially those involving cryptocurrencies like Bitcoin.
Under these guidelines set by the State Administration of Foreign Exchange, banks were to scrutinize transactions based on the participants’ identities, funding sources, and transaction frequency.
The measures aim to mitigate risks associated with illicit financial practices, including unauthorized banking and international gambling.
These rules reflected China’s ongoing effort to enforce stricter financial controls in the digital asset space.
What are these regulations and their impact?
SAFE has implemented new guidelines that significantly tighten the oversight of digital currency transactions.
These regulations mandated that Chinese banks intensify the monitoring and reporting of potentially risky cryptocurrency transactions.
Banks are now required to identify the individuals and entities involved in these transactions, track the source of the funds, and scrutinize the frequency of these trades.
The primary objectives of these regulations are to prevent illegal financial activities, such as underground banking and cross-border gambling, that might involve cryptocurrencies.
Source: X
By doing so, SAFE aims to strengthen the control over financial flows and curb the misuse of digital assets within and across China’s borders.
These measures are part of a broader crackdown on crypto-related activities that Chinese authorities believe could pose risks to the nation’s financial stability.
The impact of these stringent measures could be substantial, altering the landscape of cryptocurrency trading not only in China but globally, given the country’s significant role in the international market.
Investors and entities engaged in cryptocurrency activities will need to navigate these new compliance challenges, which could affect transaction fluidity and market dynamics in the region.
China’s Bitcoin holdings
Despite enduring tight regulations against cryptocurrencies, China holds a significant position in the global Bitcoin landscape.
Since the crackdown on ICOs and crypto exchanges in 2017, and the subsequent bans on Bitcoin mining and crypto-related businesses in 2021, China has amassed approximately 194,000 BTC.
These holdings, valued at around $18 billion, originate from seizures tied to enforcement against illicit activities, not from direct purchases by the government.
Recent regulations in 2024 continue to reflect China’s firm stance, as banks must now monitor and report transactions deemed risky, which includes those involving cryptocurrencies.
This approach starkly contrasts with the global trend where cryptocurrencies are increasingly embraced, suggesting China aims to maintain rigorous control over its financial system while minimizing cryptocurrency’s impact.
