China’s stance on cryptocurrency has shifted significantly over the years, with the nation now hosting some of the world’s harshest regulations.
Things are set to become even tougher for China-based traders, with new laws requiring banks to report and monitor suspicious crypto transactions.
China believes that digital currency, and crypto in particular, could be harmful for the nation’s financial stability.
Despite the crackdown, China also acknowledged Hong Kong’s prominence in the crypto sector, suggesting a nuanced opinion on the industry.
China’s topsy-turvy relationship with cryptocurrency has entered a new, disheartening phase for Mainland investors.
Once upon a time, the nation was a haven for Bitcoin miners, but has since become devastatingly anti-crypto.
While there are ways around it, Bitcoin and other cryptocurrencies are essentially illegal in China. You’re allowed to own crypto for personal use, but it can’t be used as an investment or a payment method.
And now, the crackdown is set to become even more severe.
New Forex Regulations Target Crypto Traders, Gamblers
Over the past week, China’s State Administration of Foreign Exchange laid down new laws for Chinese banks.
Essentially, banks must monitor and report “suspicious” international transactions, including those made via Forex, online gambling platforms or – you guessed it – cryptocurrency.
If a risky crypto trade is identified, the banks will then be obliged to uncover the user’s identity and assess past financial behaviours.
The user will then likely face further financial restrictions, while the recipient of the “risky” crypto trade may also be blacklisted for other customers.
China’s Regulatory Crackdown on Cryptocurrency May Be Set to Intensify
A lawyer at a prominent Chinese firm, ZhiHeng, noted that the move comes as part of a broader crackdown against digital currencies.
Posting on the social media platform WeChat, Liu Zhengyao said:
“The new rules will provide another legal basis for punishing cryptocurrency trading…It can be foreseen that mainland China’s regulatory attitude towards cryptocurrencies will continue to tighten in the future.”
Despite the bad news for crypto traders in the country, the Government hasn’t completely turned its nose up at the blockchain world.
The nation recently praised Hong Kong as a leader in crypto, suggesting that – at the very least – they are aware of the industry’s relevance in modern finance.
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