China Tightens Crypto Regulations, Making It Harder for Investors to Trade Digital Assets Like Bitcoin

China’s foreign exchange regulator has announced new rules targeting risky financial activities. The rules would make it harder for mainland investors to trade crypto

China’s foreign exchange regulator has announced new rules targeting risky financial activities, making it harder for mainland investors to trade crypto such as Bitcoin.

The State Administration of Foreign Exchange (SAFE) unveiled the new regulations last week. Under the new guidelines, banks are now required to monitor and report any risky foreign exchange activities, including underground banking, cross border gambling and any illegal activities that involve cryptocurrencies.

Moreover, banks are also instructed to scrutinize all these obtained activities based on the identities of these parties, the source of funds and the frequency of these transactions.

As part of the broader strategy to tighten control of cryptocurrency trade and the country’s financial system, banks are also obliged to take risk control measures. To do so, they must restrict services to any risky activity entities.

The move is in line with China’s sustained campaign against digital currencies. Bitcoins have been banned in China, and all Bitcoin operations have been illegal since 2021. Since their inception, cryptocurrencies have effectively been prohibited in that country. In addition, the government continuously enhanced its regulations to eradicate the influence of digital assets.

China Continues Ban on Crypto Mining and Trading Remains Firm

China started controlling cryptocurrencies in 2017. During that time, ICOs were banned and the government ordered cryptocurrency exchanges to shut down. In 2021 once authorities banned bitcoin mining, the crackdown intensified. This is how China has pretty much entirely put an end to any legal cryptocurrency activity in its borders.

While the interest in cryptocurrencies worldwide is growing, China remains unmoved. But some of the recent rally in bitcoin prices have also led to calls for a policy change away from the government’s capitulation to digital currencies.

Using cryptocurrency for criminal activities is against the law, China’s Supreme People’s Court ruled in August 2023. This is adding to the legal risks for cryptocurrency traders in China. In addition, the Supreme People’s Procuratorate and SAFE (State Administration of Foreign Exchange) have both issued requests for further supervision on overseas exchange activities. Stablecoins like Tether fall into this, with stricter oversight required.

However, with China enforcing such regulations, it is unknown whether such will affect the local and international cryptocurrency markets.