China has implemented new foreign exchange rules requiring banks to monitor and report risky crypto-related forex activities. The regulations aim to curb cross-border gambling, underground banking, and illicit financial transactions involving digital assets, making it harder for residents to access cryptocurrencies.

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China Introduces New Crypto Monitoring Regulations

Chinese banks are now required to keep an eye on potentially dangerous cryptocurrency dealings after the country’s foreign exchange regulator instituted new regulations.

New regulations in mainland China will reportedly make it harder for citizens to own digital assets, according to the South China Morning Post, which published the story on December 31.

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Authorities have mandated that financial institutions keep tabs on potentially hazardous foreign exchange trading and disclose any suspicious activity. Included in this category are illicit cross-border financial activities, including crypto assets, underground banking, and cross-border gaming.

Banks Required to Report Suspicious Forex Activities

Regulations compel banks in China to monitor certain operations, including the individuals and institutions engaged, the funds they use, and how often they trade.

The new regulations would give another reason to penalize crypto trading, according to Liu Zhengyao of the ZhiHeng legal company. He also mentioned that China’s regulatory attitude toward crypto might keep getting stricter, Cointelegraph shares.

Stricter Rules Aim to Limit Crypto Evasion Tactics

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Zhengyao stated that the new regulations may classify the purchase of cryptocurrency using yuan and subsequent exchange for foreign fiat currencies as cross-border trading. The new laws make it more difficult to use cryptocurrency as a means to evade the country’s forex standards.

In 2019, China’s government outlawed cryptocurrency transactions. The Chinese government has stated that reducing energy expenditures from mining and greenhouse fuel emissions is a goal. There was a blanket ban on banks dealing with cryptocurrency and other digital assets.

China’s Crypto Ban and Global Bitcoin Holdings

China is second in terms of the number of Bitcoin held per country, despite its anti-crypto attitude. At the time of writing, China possessed 194,000 BTC, which was valued at around $18 billion, according to Bitbo’s Bitcoin Treasuries tracker. In terms of total Bitcoin holdings, this places China as the second-largest country.

China has not been purchasing Bitcoin due to the country’s ban on digital assets. The nation’s Bitcoin reserves were amassed through confiscations of assets associated with criminal enterprises.

Ex-Binance CEO Changpeng “CZ” Zhao has stated that China will join other nations in implementing a Bitcoin reserve policy, despite the country’s stance against cryptocurrencies. Zhao stated at the Bitcoin MENA conference in Abu Dhabi that the government could act swiftly on policy matters if desired. “Do it at some point” is something the government, he added.