Key Takeaways
- On December 31, 2023, these regulations aimed to prevent illicit financial activities involving digital assets, like cross-border gambling
- India holds a major amount of BTC, with reports indicating it possesses approximately 194,000 BTC, worth around $18 billion.
China’s foreign exchange regulator, the State Administration of Foreign Exchange (SAFE), has introduced new rules requiring banks to closely monitor and report crypto-related transactions that may pose financial risks.
As per reports, the regulations aim to prevent illicit financial activities involving digital assets, such as cross-border gambling, underground banking, and unauthorized financial transactions.
Under the new guidelines, banks will need to track transactions based on the identity of the parties involved, the source of funds, and the frequency of trades.
This is intended to make it more difficult for individuals and businesses to use cryptocurrencies to bypass China’s capital controls. The focus is on ensuring that cryptocurrencies are not used in ways that could undermine the country’s financial regulations.
The Chinese government has taken a firm stance against digital assets since 2017 when it banned initial coin offerings (ICOs) and closed cryptocurrency exchanges. In 2021, the government expanded its crackdown, banning Bitcoin mining and declaring all crypto-related activities illegal.
The new forex rules continue this approach by targeting financial intermediaries such as banks, which are now required to monitor and report any transactions involving crypto that are deemed risky.
Legal experts, including Liu Zhengyao, a lawyer at ZhiHeng Law Firm, have noted that these new regulations provide additional legal grounds for penalizing crypto trading.
Liu emphasized that these rules would make it increasingly difficult for individuals to circumvent China’s foreign exchange controls through the use of digital assets. In particular, transactions involving the purchase of crypto with yuan and subsequent conversion into foreign currencies are now more closely scrutinized under the new rules.
Further, banks are required to implement risk-control measures, including restricting services for individuals or institutions suspected of violating the regulations.
Despite China’s strict stance on crypto, the country still holds a major amount of Bitcoin, with reports indicating it possesses around 194,000 BTC, worth approximately $18 billion. These holdings were acquired through asset seizures, as crypto remains banned for use in China’s official financial systems.
