The Chinese foreign exchange regulator introduced foreign exchange rules requiring the country’s banks to monitor and flag risky trades involving crypto assets.
On Dec. 31, the South China Morning Post reported that mainland China’s new rules will make it more difficult for residents to buy digital assets.
Under the rules, banks must monitor and report risky forex trading activities. This includes cross-border gambling, underground banks and illegal cross-border financial activities involving crypto assets.
Chinese regulators also require banks to track the activities based on the identity of individuals and institutions involved, their sources of funds and the frequency of their trades.
China to continue “draconian” anti-crypto stance
Liu Zhengyao, a lawyer at ZhiHeng law firm, said that the new rules will provide another basis for punishing crypto trading, and added that China’s regulatory stance toward crypto may continue to tighten.
Zhengyao said using yuan to buy crypto before exchanging it for foreign fiat currencies may be considered cross-border activity under the new rules. It will be difficult to circumvent the country’s forex rules through crypto under the new regulations.
China has banned crypto transactions since 2019. The Chinese government said it aimed to reduce energy expenditures from mining and greenhouse fuel emissions. Financial institutions were also prohibited from dealing with digital assets and crypto mining.
China holds $18 billion worth of Bitcoin
Despite its anti-crypto stance, China ranks second when it comes to the number of Bitcoin BTC
$95,101 held per country. According to Bitbo’s Bitcoin Treasuries tracker, China has 194,000 BTC, which was worth about $18 billion at the time of writing. This makes China the second-largest country in terms of Bitcoin holdings.
Because crypto assets are illegal in the country, China has not been buying BTC. The country’s Bitcoin holdings were acquired through asset seizures linked to illicit activities.
Despite China’s anti-crypto antics, former Binance CEO Changpeng “CZ” Zhao said it will be one of the countries to adopt a Bitcoin reserve strategy. At the Bitcoin MENA event in Abu Dhabi, Zhao said the country could move fast on policies if it wanted to. He said the government must “do it at some point.”
