Banks in China must increase scrutiny on crypto trades to comply with new forex regulations
China’s foreign exchange regulator has implemented new regulations that require banks to identify and report risky transactions, including those involving cryptocurrencies, making it harder for mainland investors to trade bitcoin and other digital assets. The State Administration of Foreign Exchange announced that banks must monitor and report activities such as underground banking, cross-border gambling, and illegal financial transactions related to cryptocurrencies. The rules apply to all local banks in mainland China and require them to track transactions based on various factors, including the identity of parties involved and the source of funds. Additionally, banks must implement risk-control measures and restrict certain services to entities engaged in such activities.
These regulations demonstrate Beijing’s ongoing strict approach to controlling commercial cryptocurrency activities, viewing them as a threat to financial stability. Chinese regulators are against bitcoin trading and mining, as they believe cryptocurrencies pose risks to the country’s financial system. Lawyer Liu Zhengyao from ZhiHeng law firm in Shanghai stated that the new rules will serve as a legal basis for penalizing cryptocurrency trading, indicating that China’s regulatory stance on cryptocurrencies will continue to tighten in the future.
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