With the booming and widespread penetration of digital currencies, the supervision of cryptocurrencies around the world is also continuously strengthened. As an important member of the cryptocurrency market, China's regulatory policies have a profound impact on the overall direction of the industry with every adjustment. Recently, the State Administration of Foreign Exchange of China officially promulgated new foreign exchange regulatory regulations on December 31, 2024, explicitly requiring major banks to implement more stringent monitoring and marking measures for cryptocurrency transactions. This move not only demonstrates China's further tightening trend in the field of cryptocurrency regulation, but also aims to prevent and control potential financial risks from the source.
The core of the regulation is to require all banks in mainland China to pay close attention to and report "high-risk foreign exchange transactions", which specifically include underground banks, cross-border gambling, and illegal cross-border financial activities involving cryptocurrencies. Banks need to track and identify such activities based on multiple factors such as the identity of the transaction subject, the source of funds, and the frequency of transactions. At the same time, banks also need to establish and improve the risk control system for the marked transaction parties and impose necessary restrictions on the scope of their services.
It is particularly noteworthy that the new regulations clearly define the use of RMB to purchase cryptocurrencies and exchange them into foreign currencies, especially transactions exceeding the legal limit, as "cross-border financial activities involving cryptocurrencies." This move will undoubtedly greatly increase the difficulty of evading foreign exchange supervision through cryptocurrencies.
For investors in mainland China, the implementation of the new regulations has undoubtedly brought unprecedented challenges. On the one hand, investors' trading behavior will be subject to stricter supervision and restrictions, and some convenient trading channels may be forced to close; on the other hand, banks will be more cautious and strict when handling cryptocurrency-related transactions, which will undoubtedly increase transaction costs and even force some investors to exit the market.
However, this series of measures also fully demonstrates the Chinese government's firm determination to crack down on commercial cryptocurrency activities. In the context of cryptocurrency trading and mining activities being regarded as a potential threat to financial stability, the Chinese government aims to effectively curb illegal trading activities and maintain the health and stability of the financial market by strengthening supervision.
Although China's regulation of cryptocurrencies is not new, the introduction of the new regulations undoubtedly marks a more solid step for the Chinese government on the road of cryptocurrency regulation. Legal experts pointed out that the new regulations provide a more solid legal basis for punishing cryptocurrency transactions, indicating that China's regulatory attitude towards cryptocurrencies will continue to tighten.
Globally, countries have different attitudes towards cryptocurrencies. China's regulatory policy appears to be more conservative and prudent, which will undoubtedly have a certain impact on capital liquidity and market activity. However, it is worth noting that in recent years, China has also been constantly exploring and adjusting its position in the field of cryptocurrencies. For example, the People's Bank of China recognized Hong Kong's innovative measures in cryptocurrency regulation in the (Financial Stability Report) and emphasized the importance of establishing a sound regulatory framework for digital assets. At the same time, Chinese courts have also ruled that it is legal to own cryptocurrencies, but only for personal holding or use as commodities, and cannot be used as a payment tool or investment vehicle.
As the cryptocurrency market continues to develop and global acceptance of digital assets gradually increases, China's regulatory policies will continue to be the focus of market attention. In the future, how to find the best balance between promoting financial technology innovation and maintaining financial stability will be an important issue and challenge facing the Chinese government.
In this context, we expect and hope that the Chinese government will continue to uphold an open, inclusive and prudent attitude to promote the healthy and orderly development of the cryptocurrency market. At the same time, we also call on investors and industry participants to pay close attention to policy trends, actively adapt to the increasingly stringent regulatory environment, and work together to create a bright future for the cryptocurrency market.