On the 12th of December 2023, the China State Administration of Foreign Exchange clearly stated the issues that China will be fighting against concerning illegal money transfers through the use of cross border banking systems, gaming, and cryptocurrency financial operations and other activities.
The South China Morning Post did a follow-up on the statements by saying that the updated requirements which were instructed to the banking firm necessitate the recording and tracking of high rick operations involving digital currencies for the sake of fighting money laundering.
The Need For Chinese Banks To Screen Malicious Transactions High Up The Ranks
As per the updated reforms in the mainland Chinese banks, they need to adopt the high-risk practices of verifying identities, sources, and the variation of funds and trades all in the same breath and together when reviewing the clients.
They will also need to have enhanced risk management structures in place and restrict the services offered to the clients who are believed to be engaging in such practices.
These measures are indicative of Beijing’s consistent efforts into getting rid of cryptocurrencies since the government believes that these change the economic patterns violence and control structures set in place.
ZhiHeng law based attorney representative Liu Zhengyao predicts that these new rules will be strong aid into getting more legal authority to punish trading of cryptos.
While making a WeChat update Liu told SCMP that these forex derogations gets too hard to go around when cryptocurrencies are involved making it harder for pe0ople to get them.
We can hereby assume that the use of cryptocurrencies to go cross border chatter should be treated as high risk business as case should tell us of attempts made to cherry picked them.
We can also hold the assumption that there will be increased supervision over the transactions made outside the authorized limits once the new structure is in place.
China has always been against the use of cryptocurrency investing and trading. To put it simply, the Chinese government banned ICOs and shut down exchanges in 2017. In 2021, authorities banned all crypto businesses and Bitcoin mining.
Although the world is advancing towards the cryptocurrency adoption, China has stood firm with its regulations. The recent shouts by some experts to pull back these tight policies have not found support.
Litigation Woes for Crypto Investors Worsen
The risk of crypto trading in China now takes a fresh look; in August, the Supreme People’s Court ruled that the conversion of criminal proceeds using cryptocurrencies is against the law. Any Chinese citizen who does such an act is committing a criminal offense. Crypto trading in China has now been given a legal requirement which puts significant restrictions on the trading of the currency.
Inaugurably, More than $35 billion worth of Bitcoin in the world is held by China. It puts China in second place in the world for owning the highest amount of bitcoin.
Such holdings are not the result of the government’s buying spree rather they can be traced or can be said to originate from asset seizures that are made in connection to crime commissions being perpetrated.
In the past, according to reports, a company identified as Huabao Overseas Technology C adjoined the arms of Chinese investors, exposing them indirectly to Bitcoin. Reports daily now suggest that the company has reached yet another milestone; This milestone rivaled many. The company plugged in to promote Bitcoin ETFs.
Users of Alipay in China discovered promotions appearing on their homepages at the beginning of this month. These promotions directed users to Huabao Overseas Technology’s spot Bitcoin ETF which was being promoted at the time as well.
For example, through the firm’s series of fund offerings ,which were classified as “QDII-FOF-LOF,” they in a round about way assisted investors buy actual shares of Coinbase as well as ARK 21Shres Bitcoin’s ETF .
