As 2025 approaches, China has unveiled new regulations further restricting cryptocurrency activities within its borders. The latest move requires banks to flag cross-border crypto transactions and potentially block services to involved parties.
New Restrictions Target Cross-Border Transactions
Under the latest rules announced by China's State Administration of Foreign Exchange, banks must now monitor and report "risky" financial behavior, specifically targeting crypto-related transactions. The regulations put crypto activities in the same category as cross-border gambling and underground banking operations.
Banks will track transaction patterns based on multiple factors, including participant identity, funding sources, and trading frequency. Parties involved in flagged transactions may face service denials and increased scrutiny from authorities.
Impact on China's Crypto Sector
These new measures add pressure to China's already heavily restricted cryptocurrency industry. Many prominent crypto companies and entrepreneurs have previously relocated operations outside the country. Notable examples include Binance, the world's largest crypto exchange, and Tron founder Justin Sun.
China's History of Crypto Crackdowns
China's stance against cryptocurrencies dates back several years. In 2017, the country began scrutinizing crypto platforms and banned initial coin offerings. By 2021, China prohibited crypto mining - a move that shifted global mining leadership to the United States. The country also banned crypto trading that same year.
The timing of these restrictions appears to align with China's development of its central bank digital currency (CBDC), the digital yuan (e-CNY).
Global Influence and Other Countries' Approaches
While China's crypto regulations often impact global markets, they haven't necessarily set the template for other nations. Several countries implemented crypto restrictions before China:
- Turkey banned crypto payments in early 2021
- Egypt restricted mining and trading in 2020
- Algeria prohibited crypto activities in 2018
- Morocco banned trading in 2017
- Bangladesh and Bolivia enacted bans in 2014
Interestingly, Morocco is now considering cryptocurrency legalization as of January 2025.
Looking Forward
As China continues its restrictive approach toward cryptocurrencies while promoting its CBDC, the global crypto community watches closely. However, evidence suggests that rather than leading the charge against crypto, China appears to be following a path already taken by other nations while adapting regulations to its specific needs and goals.