China is ramping up its anti-crypto measures with new foreign exchange regulations, making it harder for residents to engage in crypto trading. According to South China Morning Post, these rules, unveiled on Dec. 31, mandate banks to monitor the identity of traders, the source of their funds, and trading patterns. The goal? To clamp down on cross-border crypto activities, including underground banks and illegal financial transactions.

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Crypto Oversight Tightens Further

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Lawyer Liu Zhengyao from ZhiHeng law firm noted that these regulations will provide a stronger legal basis for punishing crypto traders. He explained that even converting yuan into crypto before exchanging it for foreign fiat currencies could now be flagged as cross-border activity. With these measures, circumventing China’s forex rules through crypto just got a lot tougher.

China Holds a Bitcoin Stash

Despite its aggressive stance, China surprisingly holds 194,000 Bitcoin—worth approximately $18 billion. According to Bitbo’s Bitcoin Treasuries tracker, these holdings stem from asset seizures tied to illegal activities.

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Former Binance CEO Changpeng Zhao speculated at the Bitcoin MENA event that China could pivot quickly toward a Bitcoin reserve strategy. While unlikely for now, it showcase the paradox of the country’s approach to crypto: a firm crackdown paired with significant Bitcoin holdings.

At the time of writing, Bitcoin is sitting at $92,983.54.