Once again intensifying its grip on crypto activities, China has introduced new foreign exchange rules that impose tighter control over crypto transactions.
According to a report from South China Morning Post on December 31, 2024, banks are supposed to monitor and report βrisky behavior in foreign exchange transactions.β This includes underground banking, cross-border gambling and illegal cross-border financial activities involving cryptocurrencies.
The announcement was made by the National Foreign Exchange Administration.
New rules could provide another legal basis for punishing cryptocurrency trading
Banks were mandated to track transactions based on the identity of the people and institutions involved, the source of funds and the frequency of transactions. Additionally, they must implement risk control measures to restrict services to entities reported to be engaging in such activities.
βThe new rules will provide another legal basis for punishing cryptocurrency trading,β wrote Liu Zhengyao, a lawyer at ZhiHeng Law Firm in Shanghai, in a post on WeChat last week.
Liu noted that these measures signal a strengthening of China’s already strict regulatory stance towards cryptocurrencies, making it increasingly difficult for individuals and businesses to circumvent the country’s foreign exchange laws through the through digital assets.
China and cryptography: A story of repression
China’s relationship with cryptocurrency has been marked by a series of increasing restrictions over the years.
In 2017, China banned initial coin offerings (ICOs) and ordered the closure of all domestic cryptocurrency exchanges. This has forced major players like Binance, Huobi and OKX to relocate their operations overseas.
The government expanded its crackdown on Bitcoin mining in 2021. Authorities cited environmental concerns and financial risks. Additionally, mining hubs in regions like Sichuan and Xinjiang were shut down, leading to a significant drop in the global Bitcoin hashrate at the time.
Financial institutions were barred from offering crypto-related services and foreign platforms serving Chinese residents were declared illegal.
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Despite these measures, China remains a significant player in the crypto space. The government held approximately 194,000 Bitcoins (worth approximately $18 billion), acquired during raids on illegal operations.
In fact, former Binance CEO Changpeng Zhao said that China would join other countries in implementing a Bitcoin reserve policy.
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A Shanghai court issued a surprise verdict in November 2024, declaring that possession of cryptocurrency was not illegal under Chinese law. This ultimately gave crypto holders some legal peace of mind.
Sun Jie, judge of the Songjiang People’s Court in Shanghai, explained this situation in a statement posted on the WeChat account of the Shanghai Higher People’s Court. Takeaway meals? Citizens can legally hold cryptocurrencies as personal property, but companies cannot invest or issue tokens without strict oversight.
The statement follows a case involving a dispute over an initial coin offering, which was characterized as illicit financing under China’s hardline policies.
Beijing still views crypto as a financial grenade, banning related business activities outright to avoid economic chaos. Although crypto can confer property rights on individuals, its use commercially or as payment for shady transactions remains prohibited.
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The post Banks will ‘closely monitor’ crypto trades as China imposes new Forex rules appeared first on 99Bitcoins.
