China Introduces Stricter Crypto Rules for Foreign Exchange Transactions

China has ramped up efforts to regulate cryptocurrency activities with stricter foreign exchange rules. The State Administration of Foreign Exchange (SAFE) now requires banks to monitor transactions tied to digital assets. 

Banks Face Tougher Requirements to Flag Risky Trades

SAFE’s new guidelines demand stronger risk controls from banks across mainland China. Financial institutions must flag suspicious trades and limit services to entities involved in high-risk activities. 

Authorities aim to protect financial stability by reducing risks linked to cryptocurrency transactions. Liu Zhengyao, a lawyer at ZhiHeng law firm, explained that these rules provide stronger legal backing to punish crypto trading. 

He noted that converting yuan to cryptocurrencies for cross-border payments is now a high-risk activity. Transactions exceeding legal thresholds will undergo closer inspection, reducing chances of evading foreign exchange rules.

China’s anti-crypto stance dates back to 2017, when the government banned ICOs and closed crypto exchanges. By 2021, authorities prohibited Bitcoin mining and declared all crypto-related businesses illegal. 

Legal Risks Rise for Crypto Enthusiasts

The Supreme People’s Court recently ruled that using cryptocurrencies to transfer criminal proceeds violates Chinese law. Authorities are also increasing scrutiny on forex trading involving stablecoins.

China remains a paradox in the crypto world. The country holds 194,000 BTC, valued at $18 billion, through asset seizures. Meanwhile, companies like Huabao Overseas Technology offer indirect Bitcoin exposure through innovative funds.

This regulatory tightening underscores Beijing’s commitment to curbing crypto-related risks while investors explore new avenues. These measures reshape the crypto landscape in a country that remains unyielding in its approach.