China’s forex regulator is tightening the country’s foreign exchange laws to crack down on digital asset transactions in the country’s latest digital currency laundering campaign.
The State Administration of Foreign Exchange has released new rules for commercial banks that require them to flag any forex trade they consider risky, such as those involving digital assets. They are also required to report transactions involving cross-border gambling and underground banking. They must identify the transaction parties, the source of funds, the trading frequency, and other related data, Reports South China Morning Post.
It is the country’s latest effort to stamp out digital assets in a campaign that goes back eight years. President Xi Jinping’s administration ordered first Exchange 2017 to close, and since then it has been revive the power every other year. However, the bans have not been as effective, with Chinese residents finding ways to circumvent them.
Mining for example, despite a ghostly abortion two years ago is still in the country; one recent report found that China accounts for 55% of BTC mining pool hash rate. It doesn’t help that the Chinese government owns 194,000 BTC (worth $19 billion), which is only slightly bettered by the US, according to a data source.
still, Beijing holds out new rules to disrupt specific facets of the sector, from ICOs to mining. The latest effort is yet another avenue for the government to cut out digital asset users, said Liu Zhengyao, a lawyer at the Shanghai-based ZhiHeng law firm.
“The new rules provide another legal basis for punishing the trading of cryptocurrencies. It can be predicted that mainland China’s regulatory attitude towards cryptocurrencies will continue to tighten in the future,” he said on WeChat wrote.
China has strict currency regulations that some residents have dabbled in digital assets, with stablecoins proving popular for this. This loophole can close, Zhengyao believes, noting that they “will make it increasingly difficult in the future to evade the country’s forex regulations through crypto.”
Despite the government’s strict anti-digital currency stance, a The Shanghai judge decided two months ago that holding digital assets in China is not illegal. However, it is illegal for businesses to invest in digital assets or issue tokens, as it “not only disrupts the economic and financial order, but can also become a payment and settlement tool for illegal and criminal activities.”
See: Reggie Middleton on DeFi, Booms/Busts & Crypto Regulation
