China Introduces New Rules For Local Banks To Flag Risky Transactions, Including Crypto Trades
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
China’s authorities ended the previous year by launching a new set of rules for the local banks which will require them to flag risky transactions, including those that involve cryptocurrencies. As a direct consequence of the new rules, it will now be a lot harder to buy and sell Bitcoin and other digital assets using the yuan.
New Rules To Further Affect Crypto Trading
The rules were introduced at the end of December 2024 by the State Administration of Foreign Exchange. They will obligate the banks in China to monitor and report any risky foreign exchange trading behavior, including any underground banks, international gambling, or illegal international financial activities involving cryptocurrencies.
After studying the rules, a Shanghai-based lawyer from ZhiHeng Law Firm, Liu Zhengyao, explained that the rules would provide another legal basis for punishing crypto trading. The lawyer added that this indicates the future attitude of mainland China toward crypto, which will likely only continue to tighten.
The rules will apply to all banks in mainland China, which will also be expected to track activities based on the identity of the involved parties, as well as the source of their funds, and trading frequencies. Not only that, but they must also implement risk-control measures that would restrict the provision of risky services.
China Continues The Crypto Crackdown While Developing Its CBDC
While China used to be the leading country in Bitcoin transactions, its strict curbs on the industry banned all crypto-related activities overnight in 2017. The country was still a major hub for crypto miners, but that ended too in 2021, effectively banishing the miners from within its borders.
The country’s anti-crypto stance continued to introduce more and more anti-crypto laws, while at the same time, they favored its native stablecoin, popularly known as digital yuan. This is its native CBDC which has been in development and testing for years now. And, while China is the leading nation in terms of CBDC development, it still remains unclear when its native stablecoin might be released on a mass scale.
It is worth noting, however, that the Chinese government still holds 194,000 BTC, which is worth around $18 billion. The government acquired the funds from raids and seizures of illegal operations, which have been conducted for years now, cracking down on all kinds of criminal operations.
