China’s new rules require banks to flag risky transactions, including those involving crypto, making it harder for mainland investors to trade digital assets.
China’s foreign exchange regulator, the State Administration of Foreign Exchange, has introduced new rules that require banks to keep a closer eye on digital asset transactions, the South China Morning Post has learned, citing the regulator’s announcement.
The rules that apply to local banks in mainland China focus on identifying “risky foreign exchange trading behaviors,” the report said. These include underground banking, cross-border crypto transactions and illegal financial activities.
Banks now have to track transactions by checking, for example, who is involved, where the money comes from and how often the transactions take place. In addition, Chinese banks are expected to introduce risk control measures for these companies and limit their access to certain services, the report said.
The new rules are part of China’s efforts to tighten control over cryptocurrencies, including Bitcoin trading and mining, which officials see as a risk to financial stability.
China has taken a tough stance on cryptocurrencies over the years. Back in 2017, Beijing banned initial coin offerings and closed domestic crypto exchanges to prevent financial risks. By 2021, things escalated with a complete ban on crypto trading and mining. Despite these restrictions, it is still technically legal for individuals to own digital assets, although the gray areas in regulation make things complicated.
