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Banks Will “Closely Monitor” Crypto Transactions As China Imposes New Forex Rules

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As its grip on cryptocurrency activities is tightened once again, China has introduced new foreign exchange rules that impose stricter scrutiny on cryptocurrency transactions.

According to a report from South China Morning Newspaper dated December 31, 2024, Banks are expected to monitor and report “risky foreign exchange trading behaviours”. This includes underground banking, cross-border gambling, and illegal cross-border financial activities involving cryptocurrencies.

This announcement was issued by the State Administration of Foreign Exchange.

The new rules could be another legal basis for penalizing cryptocurrency trading

Banks were authorized to track transactions based on the identity of the individuals and institutions involved, the source of funds, and the frequency of trading. Furthermore, it must implement risk control measures to restrict services provided to entities designated as engaging in such activities.

“The new rules will provide another legal basis for punishing cryptocurrency trading,” Liu Zhengyao, a lawyer at law firm ZhiHeng in Shanghai, wrote in a WeChat post last week.

Liu noted that these measures signal a deepening of China’s already strict regulatory stance toward cryptocurrencies, making it increasingly difficult for individuals and companies to circumvent the country’s foreign exchange laws through digital assets.

China and cryptocurrencies: A history of campaigns

China’s relationship with cryptocurrencies has been characterized by a series of escalating restrictions over the years.

In 2017, China banned initial coin offerings (ICOs) and ordered the closure of all domestic cryptocurrency exchanges. This has forced major players like Binance, Huobi, and OKX to move their operations offshore.

The government expanded its campaign to include Bitcoin mining in 2021. Authorities cited environmental concerns and financial risks. Furthermore, mining centers in regions such as Sichuan and Xinjiang were shut down, causing a significant decline in the global Bitcoin hashrate at the time.

Financial institutions have been banned from providing cryptocurrency-related services, and offshore platforms serving Chinese residents have been declared illegal.

Explore: Shanghai Court Overturns China’s Bitcoin Ban: Will China’s Power Grid Adapt?

Despite these measures, China remains an important player in the cryptocurrency space. The government reportedly owns approximately 194,000 bitcoins (worth about $18 billion), obtained through raids on illegal operations.

In fact, former Binance CEO Changpeng Zhao said that China will join other countries in implementing a Bitcoin reserve policy.

Owning cryptocurrencies is not illegal under Chinese law

A Shanghai court surprisingly overturned a ruling in November 2024, declaring that owning cryptocurrency is not illegal under Chinese law. This has finally given cryptocurrency holders some legal peace of mind.

Sun Jie, judge of the Shanghai Songjiang People’s Court, explained the matter in a statement on the WeChat account of the Shanghai Supreme People’s Court. Takeaway? Citizens can legally hold cryptocurrencies as personal property, but companies cannot invest in or issue tokens without strict oversight.

This statement came after a case involving a dispute over an initial coin offering, which was described as illicit financing under China’s hard-line policies.

Beijing still views cryptocurrencies as a financial bomb, and directly bans related business activities to avoid economic chaos. While cryptocurrencies may hold ownership rights for individuals, their commercial use or as a means of payment for suspicious transactions remains prohibited.

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The post Banks Will Watch Cryptocurrency Transactions Closely As China Imposes New Forex Rules appeared first on 99Bitcoins.

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