China Tightens Rules on Banks to Monitor Crypto Transactions

Banks Must Monitor Crypto and Forex Transactions

China has introduced new regulations requiring banks to closely monitor foreign exchange and cryptocurrency transactions. The State Administration of Foreign Exchange (SAFE) issued a directive mandating banks to identify individuals and institutions involved in transactions, track fund sources, and observe trading patterns to prevent illegal cross-border activities.

Efforts to Curb Illegal Crypto Trading

The regulations aim to combat underground banking, cross-border gambling, and crypto-related violations. Using the yuan to purchase cryptocurrencies and converting them into foreign currencies could now be classified as illegal, particularly if transactions exceed legal thresholds.

Balancing Tight Controls and Legal Recognition

While China maintains a strict anti-crypto stance, a recent court ruling recognized cryptoassets as property under specific conditions, providing limited protection. Advocates like Justin Sun suggest regulatory reforms could benefit the global crypto market, but China’s latest measures signal an ongoing crackdown.