Crypto Industry Faces Tighter Regulations in China as Anti-Money Laundering Laws Get Revamped
Crypto News – In 2021, China implemented a comprehensive ban on the use of cryptocurrencies. However, due to advancements in technology and the inherent decentralized nature of crypto, mainland users have managed to discover ways to access the cryptocurrency market.
China is now poised to introduce significant amendments to its Anti-Money Laundering (AML) regulations, with a particular focus on incorporating cryptocurrency-related transactions. This move comes in response to increasing calls from policymakers in the country for greater oversight of the burgeoning cryptocurrency industry.
Local media reports indicate that Prime Minister Li Qiang chaired an executive meeting of the State Council on January 22 to discuss the proposed revisions to the AML law. The initial draft of these regulations was introduced in 2021, and the revised draft was included in the State Council’s legislative agenda for 2023, with the expectation that it will be signed into law by 2025.
This marks the first substantial revision of China’s AML regulations since 2007.
Prominent scholars and financial experts who participated in discussions surrounding the revised AML regulations pointed out that these laws cover a wide range of areas, making it challenging to create a comprehensive draft. As a result, the most pressing issues are being addressed initially through a framework.
Wang Xin, a professor at Peking University Law School who took part in these discussions, emphasized the urgent need for resolving issues related to cryptocurrency money laundering at the legal level. Xin also noted that the use of cryptocurrencies and digital assets for money laundering has become increasingly mainstream, highlighting that current Chinese laws lack a clear definition of digital assets.
Professor Xin further observed that although the revised draft incorporates measures to prevent digital asset-related money laundering, it lacks specific operational guidance on the subsequent seizure, freezing, deduction, and confiscation of assets involved in money laundering crimes, leading to a significant gap. He stressed that there is still ample room for improvement in combating money laundering associated with digital assets.
Despite China’s blanket ban on cryptocurrency use in 2021, which included prohibiting offshore exchanges from offering services and banning all forms of cryptocurrency mining, mainland users have ingeniously discovered ways to access the cryptocurrency market. This has consequently raised concerns about money laundering risks. The forthcoming amended regulations aim to impose more stringent guidelines to mitigate such activities.