China has implemented stringent regulations aimed at monitoring and reporting risky foreign exchange and cryptocurrency transactions, as part of its ongoing effort to combat illegal cross-border financial activities.
The State Administration of Foreign Exchange (SAFE) has mandated that banks track transactions related to underground banking, cross-border gambling, and illicit crypto activities.
This initiative requires banks to scrutinize the identities of individuals and institutions involved, trace the sources of funds, and monitor trading frequencies, making it increasingly difficult for Chinese investors to engage in cryptocurrency trading.
Historically, China has maintained a strict anti-crypto stance, viewing digital currencies as a potential threat to its financial stability. Legal expert Liu Zhengyao emphasized that the new regulations provide a legal basis for penalizing crypto trading, particularly when transactions exceed legal limits.
Despite this crackdown, China remains a significant player in the Bitcoin market, holding over 190,000 BTC acquired through seizures linked to illegal activities.
While the government has enforced strict policies since 2017, recent court rulings have acknowledged crypto assets as property under Chinese law, albeit with limited protections.
Advocates like Justin Sun, founder of the Tron blockchain, have called for a more progressive regulatory approach to enhance China’s position in the global crypto landscape.
However, the prevailing trend indicates a tightening of regulations, with SAFE’s directive reinforcing the government’s commitment to eliminating perceived financial risks, leaving Chinese investors in a heavily restricted trading environment.
