Key Points
- China’s foreign exchange authority introduces stricter regulations on cryptocurrency operations.
- Despite the regulations, China remains a substantial holder of Bitcoin globally.
China’s foreign exchange regulator has recently announced a new set of rules aimed at increasing oversight of cryptocurrency activities.
These new directives require banks to monitor and report potentially hazardous transactions, especially those involving cryptocurrencies like Bitcoin.
New Regulations and Their Impact
The State Administration of Foreign Exchange (SAFE) has set forth guidelines that require banks to scrutinize transactions based on the participants’ identities, funding sources, and transaction frequency.
The primary aim of these rules is to mitigate risks associated with illicit financial practices, such as unauthorized banking and international gambling.
These measures are part of China’s ongoing effort to enforce stricter financial controls in the digital asset space.
These regulations could significantly alter the landscape of cryptocurrency trading, not only in China but globally, given the country’s substantial role in the international market.
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 continue to reflect China’s firm stance, as banks must now monitor and report transactions deemed risky, which includes those involving cryptocurrencies.
This approach is in stark contrast 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.
