On the eve of 2025, the Chinese government released new laws heavily hurdling cryptocurrency circulation in mainland China. This was by far not the first attack on crypto by China. Is China a role model for other governments that don’t want crypto in their countries?
New legal attacks on crypto in China
On Dec. 31, 2024, China tightened up its crypto regulation once again. This time, the foreign exchange regulator is pushing the banks to flag all cross-border crypto-related transactions and block the parties involved from certain bank services. Now, banks must track the financial behaviour deemed risky based on the identity of the transaction participants, source of funds, trade frequency, and other factors.
Formally, the regulation is aimed to obtain control over risky financial activity. The State Administration of Foreign Exchange relates any transactions with crypto involved to risky financial behavior. Other transactions that fit the restricted category include cross-border gambling transactions and transactions made via underground banks.
The fact that banks will collect and report the information of people and institutions involved in those transactions is adding a new dimension of risk to cryptocurrency transactions and gambling. Now, the involved parties risk facing unwanted attention from the state, service denials, and potential troubles with the law in the long run.
The new regulations may severely harm the Chinese cryptocurrency sector, which already exists in extremely harsh conditions, and many key companies and entrepreneurs have already fled the country to build their businesses elsewhere. The notable examples are Binance, the world’s leading crypto exchange, and the Tron founder Justin Sun.
Most probably, the new crypto laws in China will only become more hostile towards digital assets in the future (not including CBDCs), while the latest regulations are totally in line with the previous restrictions of the Chinese authorities. The Chinese anti-crypto laws managed to impact not only mainland China but also shake the global crypto sector.
Previous anti-crypto laws and their global impact
The Chinese government has a long history of suppressing the local cryptocurrency sector. It may seem that the internal restrictions cannot impact the global crypto industry, but it’s far from the truth. Some of the cryptocurrency laws adopted in China had an impact on the global crypto market.
At some point, China was the crypto capital of the world. The first crypto exchange, BTC China, was launched back in 2011. In 2013, one of the biggest online services in China, Baidu, started to accept payments in Bitcoin. In the following year, the groundbreaking BTC mining company Bitmain was created in China. The growing totalitarian tendencies were pushing people towards embracing cryptocurrency, as it promised privacy and independence. It’s understood that the government couldn’t have tolerated this technology for long, as it was undermining the state’s dominance and control.
The overall crypto regulation journey in China can be seen as the gradual elimination of any tools for private unsupervised financial activity while forcing institutions and individuals to use digital yuan (e-CNY), an asset fully controlled by the government.
2017 was the year China began to scrutinize crypto platforms. In the first half of the year, several exchanges were under threat of shutdown due to failure to comply with anti-money laundering laws. In September, China banned initial coin offerings, amidst the ICO bubble peak, crashing the BTC price by roughly 5%. Although only a tiny percentage of projects funded via ICOs proved to have real value, the complete ban is not necessarily seen as the best solution. Both these attacks on the crypto sector resulted in a substantial BTC price drop in the crypto markets across the world.
It doesn’t block China from being the world’s crypto mining capital in the following years. Reportedly, in 2020, China mined 67% of all bitcoins. In 2021, this number dropped to zero as the State Council banned cryptocurrency mining in China altogether. This move had implications–for instance, it allowed the USA to become the world’s leader in mining.
Other attacks on the crypto sector in 2021 included the ban on crypto trading and a series of shutdowns of crypto exchanges. The news triggered a 7% drop in the Bitcoin price. The crypto crackdown timing coincides with the new developments of the Chinese CBDC project, the digital yuan. By November 2021, cryptocurrencies were effectively banned in China.
As the rumours about the soon-complete ban of crypto in China were circulating in 2024, the new restrictions didn’t catch investors off-guard, and the BTC price stayed unaffected.
China’s anti-crypto laws usually provoke BTC sell-offs, but do they inspire legislators in other countries to obstruct crypto in their countries? Let’s do a little fact-check.
Do other countries follow China’s path in terms of crypt regulation?
China is not responsible for the crackdowns on crypto all over the world, nor does it pioneer an outright hostile approach towards decentralized digital money. Nevertheless, as one of the most influential countries on Earth, it may seem to be a role model for governments that don’t want cryptocurrencies in their countries. Is that the case?
The answer is rather negative. China’s influence makes the anti-crypto laws impactful for the crypto market and news outlets. But we can’t say that the country’s legislators are the world leaders in fighting cryptocurrencies.
Turkey banned crypto payments several months ahead of China in 2021. Egypt created legal obstacles for mining and trading cryptocurrencies back in 2020. Algeria prohibited any activity involving cryptocurrencies in 2018. Morocco banned crypto trading in 2017 when China took its first steps towards a total crypto ban. It’s worth saying that as of January 2025, the central bank of Morocco is eyeing cryptocurrency legalization. Bangladesh banned crypto in 2014, following the earlier bans by Bolivia and Ecuador.
After all these examples, it’s not hard to tell that China is rather exploring the effects of banning crypto using other countries’ experiences than serving as a role model in this regard.
