At the start of 2025, the Chinese government once again intensified its measures against cryptocurrencies. The new laws significantly restrict their circulation in mainland China. This move is part of China's long-term strategy against cryptocurrencies. Could these measures serve as an inspiration for other nations?
New Steps Against Cryptocurrencies in China
The latest regulations, announced on December 31, 2024, target cross-border cryptocurrency transactions. China's foreign exchange regulator demands that banks identify and block transactions linked to cryptocurrencies, monitoring high-risk behavior based on participant identity, source of funds, and trading frequency.
These measures aim to curb high-risk financial activities, including cross-border gambling and underground banking. However, the new rules increase risks for individuals and institutions involved in crypto transactions, exposing them to potential denial of banking services and legal consequences.
Impact on China’s Cryptocurrency Sector
The new regulations deal yet another blow to China’s cryptocurrency sector, which is already operating under extremely hostile conditions. Major crypto companies like Binance and Tron founder Justin Sun have relocated their operations abroad.
This trend suggests that China’s laws will continue to heavily target the crypto industry while favoring the state-controlled digital yuan (e-CNY) as the sole government-endorsed digital asset.
China’s History of Crypto Regulation and Its Global Impact
China has a long history of suppressing its cryptocurrency sector. Although these restrictions might seem domestic in scope, their impact is felt globally.
China was once a crypto powerhouse. In 2013, Baidu started accepting Bitcoin payments, and in 2014, Bitmain was founded to mine BTC. By 2020, China mined 67% of the world’s Bitcoin. However, this dominance ended in 2021 when China banned cryptocurrency mining, allowing the U.S. to take the lead.
Other significant actions include the 2017 ICO ban, which caused Bitcoin prices to drop, and the 2021 ban on cryptocurrency trading, coinciding with the rollout of the digital yuan, which China prioritizes.
Are Other Countries Inspired by China’s Approach?
While China’s measures influence the global crypto market, they cannot be considered a model for other nations. Many countries have implemented cryptocurrency regulations independently of China’s laws.
For instance, Turkey banned crypto payments in 2021, Egypt tightened regulations on mining and trading in 2020, and Algeria outlawed cryptocurrencies in 2018. Bangladesh banned cryptocurrencies as early as 2014. Conversely, some nations, like Morocco, are now considering legalizing cryptocurrencies.
Conclusion: China as a Cautionary Example
Rather than serving as an inspiration, China demonstrates how strict cryptocurrency regulations can harm the domestic sector and stifle innovation. While its actions influence the global market, most countries have chosen their own path for regulating digital assets. China appears more as an experimenter than a genuine role model.
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