Summary:
China's forex regulator introduces new rules for banks to monitor cryptocurrency trades.
Regulations complicate buying and selling Bitcoin and other digital assets.
Banks must track activities based on identity, source of funds, and trading frequency.
New rules aim to eliminate commercial cryptocurrency activities seen as threats to financial stability.
Liu Zhengyao warns of a tightening regulatory attitude towards cryptocurrencies.
China’s New Forex Regulations on Cryptocurrency Trading
China's foreign exchange regulator has unveiled new rules mandating banks to flag risky trades, including those involving cryptocurrencies. This move is expected to complicate the buying and selling of Bitcoin and other digital assets for mainland investors.
Banks are instructed to monitor and report on risky foreign exchange trading behaviors. This includes activities related to underground banks, cross-border gambling, and illegal financial transactions involving cryptocurrencies, as stated by the State Administration of Foreign Exchange.
The regulations apply to all local banks across mainland China and require them to track these activities based on:
- Identity of institutions and individuals involved
- Source of funds
- Trading frequency
Additionally, banks must implement risk-control measures to oversee these entities and may restrict certain services to them. This latest regulation reflects Beijing's ongoing efforts to impose strict controls aimed at eliminating commercial cryptocurrency activities, which are perceived as a threat to the nation's financial stability.
Liu Zhengyao, a lawyer at ZhiHeng law firm in Shanghai, commented, “The new rules will provide another legal basis for punishing cryptocurrency trading. It can be foreseen that mainland China’s regulatory attitude towards cryptocurrencies will continue to tighten in the future.”
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