China's foreign exchange regulator has issued regulations requiring domestic banks to monitor and report risky transactions involving crypto.
On December 31, the South China Morning Post reported that new regulations in China will make it more difficult for ordinary people to buy digital assets. Under the regulations, banks must monitor and report risky foreign exchange trading activities, including cross-border gambling, underground banking, and illegal cross-border financial activities involving crypto.
Chinese regulators also require banks to monitor activity based on the identities of individuals and organizations involved, the source of funds, as well as the frequency of their transactions.
China continues its “harsh” stance on cryptocurrencies
Liu Zhengyao, a lawyer at ZhiHeng law firm, noted that the new regulations will provide more grounds to punish cryptocurrency trading, while predicting that China’s regulatory stance will likely continue to tighten.
Zhengyao said that using yuan to buy crypto before converting it to foreign fiat currencies would be considered cross-border activities under the new regulations. He also stressed that it would be difficult to circumvent the country's foreign exchange laws through digital currencies under these new regulations.
China banned crypto trading in 2019. The government said the goal was to reduce energy consumption from mining and reduce greenhouse gas emissions. Financial institutions were also banned from engaging in digital assets and crypto mining.
China Holds $18 Billion in Bitcoin
Despite its anti-crypto stance, China still ranks second in terms of the amount of Bitcoin held per country. According to Bitbo’s Bitcoin Treasuries tracker, China has 194,000 BTC, worth about $18 billion at the time of writing.
Since crypto is illegal in the country, China does not buy BTC. The country's Bitcoin holdings are obtained through seizures of assets related to illegal activity.
Bitcoin holdings by country | Source: BitcoinTreasuries
Despite China's anti-crypto antics, former Binance CEO Changpeng Zhao said it will be one of the countries to adopt a Bitcoin reserve strategy, as Bitcoin Magazine reported.
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