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China’s new forex rules require Chinese banks to track identity, fund sources, and trading frequencies to curb cross-border crypto activities.
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The Chinese foreign exchange regulator released rules requiring the country’s banks to monitor and flag risky trades involving crypto assets.
On Dec. 31, the South China Morning Post reported that China’s new rules would make it more difficult for China’s residents to buy digital assets.
With the rules, banks must monitor and report risky foreign exchange trading activities. This includes cross-border gambling, underground banks and illegal cross-border financial activities involving crypto assets.
Chinese regulators also require banks in mainland China to track the activities based on the identity of individuals and institutions involved, their source of funds, and the frequency of their trades.
China to continue “draconian” anti-crypto stance
Liu Zhengyao, a lawyer at ZhiHeng law firm, said that the new rules will provide another basis for punishing crypto trading. The lawyer said mainland China’s regulatory stance toward crypto may continue to tighten.
Zhengyao said using yuan to buy crypto before exchanging it for foreign fiat currencies may be considered cross-border activities involving crypto assets under the new rules. The lawyer said it would be difficult to circumvent the country’s forex rules through crypto with the new regulations.
China has banned crypto transactions since 2019. The Chinese government said that the crypto bank aimed to reduce energy expenditures from mining and greenhouse fuel emissions. Financial institutions are also prohibited from dealing with digital assets and crypto mining.
Related: China denies involvement after ‘major’ breach of US Treasury workstations
China holds $18 billion worth of Bitcoin
Despite its anti-crypto stance, China ranks second when it comes to the number of Bitcoin (BTC) held per country. According to Bitbo’s Bitcoin Treasuries tracker, China has 194,000 BTC, which is worth about $18 billion at the time of writing. This makes China the second-largest country in terms of Bitcoin holdings.
Because crypto assets are illegal in the country, China has not been buying BTC. The country’s Bitcoin holdings were acquired through asset seizures linked to illicit activities.
Number of countries holding Bitcoin. Source: Bitcoin Treasuries by Bitbo
Despite China’s anti-crypto antics, former Binance CEO Changpeng “CZ” Zhao said the country would be one of the countries to adopt a Bitcoin reserve strategy. At the Bitcoin MENA event in Abu Dhabi, Zhao said the country could move fast on policies if it wanted to. He said the country must “do it at some point.”
Magazine: ‘China’s MicroStrategy’ Meitu sells all its Bitcoin and Ethereum: Asia Express
This article first appeared at Cointelegraph.com News
