China Cracks Down on Crypto: Are Other Countries Taking Notes?
As we gear up for 2025, a seismic shift is taking place in the world of crypto—one that echoes from the Great Wall of China to the shores of America. Just when we thought China might ease up, the government has unveiled stringent new laws that stifle cryptocurrency flow within its borders. But the question is, should other nations take notes from China’s playbook on crippling the crypto landscape?
China’s Latest Legal Assault on Crypto
On December 31, 2024, as the world celebrated the dawn of a new year, China clamped down on cryptocurrency regulations yet again. The foreign exchange regulator is now compelling banks to flag all cross-border crypto transactions, effectively putting a damper on anyone daring to engage in digital currency. Banks are tasked with surveilling financial activities, identifying those deemed “risky” based on various criteria, including the identity of the parties involved, source of funds, and transaction frequency.
Officially, these regulations aim to clamp down on what the government deems risky financial behavior. The State Administration of Foreign Exchange is linking crypto transactions to high-risk activities, placing them in the same category as cross-border gambling and dealings with underground banks. This pervasive surveillance means that crypto enthusiasts now face a minefield of potential scrutiny, service denials, and even legal consequences.
The ramifications of these new laws could spell disaster for China’s already beleaguered crypto market. Many key players, including Binance—the world’s leading crypto exchange—and Tron founder Justin Sun, have already sought refuge abroad to build their businesses in more welcoming environments.
Looking ahead, it’s likely that China’s crypto laws will only become more draconian, steering clear of treating digital assets with leniency, while the latest regulations perfectly align with a long-standing trend of hostility toward cryptocurrencies. These legislative moves don’t just confine themselves to China; they’ve sent shockwaves throughout the global crypto community.
The Precedent of China’s Crypto Crackdowns
China’s history of anti-crypto sentiment is long and fraught with disruption. While it might seem that domestic laws wouldn’t affect the international crypto scene, the reality is starkly different. In its heyday, China was the epicenter of global cryptocurrency activity. The launch of BTC China in 2011 and Baidu’s acceptance of Bitcoin payments in 2013 put the nation at the forefront of the crypto revolution. Yet, as authoritarianism tightened its grip, the allure of privacy and independence offered by crypto became untenable for the government.
China’s regulatory path can be viewed as a concerted effort to eliminate any form of unsupervised financial activity. The ultimate goal? To steer individuals and institutions toward the government-controlled digital yuan (e-CNY).
2017 marked the beginning of serious crackdowns, with multiple exchanges facing shutdowns for non-compliance with anti-money laundering laws. The pivotal ban on initial coin offerings that followed sent Bitcoin prices spiraling downwards—a clear indicator of how Chinese regulations can send shockwaves through the global market.
Despite its crackdowns, China did not shy away from becoming the world’s mining powerhouse, accounting for 67% of all Bitcoin mining by 2020. However, after a sweeping ban on mining in 2021, the U.S. surged ahead to take the lead. Additional measures included banning crypto trading and shuttering exchanges, leading to a 7% drop in Bitcoin prices. By November 2021, the reality was clear: cryptocurrencies were effectively banned in China.
As whispers of an impending total crypto ban circulated in 2024, the news hardly rattled investors, keeping Bitcoin prices stable amid the turmoil.
The influence of China’s anti-crypto laws often results in Bitcoin sell-offs. But do these moves inspire lawmakers in other nations to follow suit? Let’s take a closer look.
Is China Setting the Tone for Crypto Regulations Worldwide?
While China’s crackdown has made a significant impact on the crypto market, it’s not the sole architect of global anti-crypto sentiment. The reality is, as influential as it may be, China does not lead the charge against decentralized digital currencies.
In fact, countries like Turkey, Egypt, Algeria, and Morocco have taken their own steps to curb crypto activities. Turkey banned cryptocurrency payments months before China’s 2021 crackdown, while Egypt imposed legal constraints for mining and trading in 2020. In 2018, Algeria outright prohibited any cryptocurrency activities, and even Morocco, which implemented crypto trading bans in 2017, is now contemplating legalization.
These examples illustrate that China is more of a trend observer than a trendsetter when it comes to banning cryptocurrencies. It appears that legislators are examining the outcomes of other countries’ approaches rather than pioneering a movement against crypto themselves.
