On the eve of 2025, the Chinese government issued new laws that severely hinder cryptocurrency trading in mainland China. This was not the first attack on cryptocurrencies by China. Is China a role model for other governments that don't want cryptocurrencies in their countries?

New legal attacks on cryptocurrencies in China

On December 31, 2024, China tightened its regulation of cryptocurrencies again. This time, the foreign exchange regulator is pressuring banks to report all cross-border cryptocurrency-related transactions and ban relevant parties from some banking services. Now, banks must track what financial behavior is considered risky based on the identity of the transaction participants, the source of the funds, the frequency of the trade, and other factors.

Officially, the regulation aims to control risky financial activity. The State Administration of Foreign Exchange links any transactions with cryptocurrencies to risky financial behavior. Other transactions that fit the restricted category include cross-border gambling transactions and transactions conducted via underground banks.

The fact that banks collect and report information about the people and institutions involved in those transactions adds a new dimension of risk to cryptocurrency transactions and gambling. Now, interested parties risk facing unwanted state attention, denial of services, and potential problems with the law in the long term.

The new regulations could severely harm the Chinese cryptocurrency sector, which is already in extremely harsh conditions, and several major companies and entrepreneurs have already fled the country to build their businesses elsewhere. Notable examples include Binance, the world's leading cryptocurrency exchange, and Tron founder Justin Sun.

Most likely, China's new encryption laws will do just that become more aggressive towards digital assets in the future (It does not include central bank digital currencies), While the latest regulations are fully in line with the previous restrictions of the Chinese authorities. China's anti-crypto laws have not only managed to impact mainland China, but also destabilized the global cryptocurrency sector.

Past anti-encryption laws and their global impact

The Chinese government has a long history of suppressing the domestic cryptocurrency sector. It may seem that internal restrictions cannot affect the global cryptocurrency industry, but it is far from the truth. Some cryptocurrency laws adopted in China have had an impact on the global cryptocurrency market.

At one point, China was the cryptocurrency capital of the world. The first cryptocurrency exchange, BTC China, launched in 2011. In 2013, one of the largest online services in China, Baidu, began accepting payments in Bitcoin. The following year, the leading BTC mining company Bitmain was established in China. Growing Totalitarian trends They were pushing people towards adopting cryptocurrencies, because they promised privacy and independence. Understandably, the government could not tolerate this technology for long, as it was undermining the state's hegemony and control.

China's overall cryptocurrency regulation journey can be seen as phasing out any tools for unsupervised private financial activity while forcing institutions and individuals to use the digital yuan (e-CNY), an asset fully controlled by the government.

2017 was the year China started examining cryptocurrency platforms. In the first half of the year, several exchanges were threatened with closure due to non-compliance with anti-money laundering laws. In September, China banned initial coin offerings, amid the peak of the ICO bubble, causing Bitcoin's price to collapse by nearly 5%. Although only a small percentage of projects funded through ICOs have proven to have real value, a complete ban is not necessarily seen as the best solution. Each of these attacks on the cryptocurrency sector led to a significant decline in Bitcoin prices on cryptocurrency markets around the world.

This does not prevent China from becoming the cryptocurrency mining capital of the world in the following years. Reportedly, in 2020, China mined 67% of all bitcoins. In 2021, this number dropped to zero as the State Council completely banned cryptocurrency mining in China. This move had implications – for example, it allowed the United States to become so The world's leader in mining.

Other attacks on the cryptocurrency sector in 2021 included bans on cryptocurrency trading and a series of closures of cryptocurrency exchanges. The news led to a 7% drop in the price of Bitcoin. The timing of the cryptocurrency campaign coincides with new developments of the Chinese CBDC project, the digital yuan. By November 2021, cryptocurrencies It was effectively blocked In China.

As rumors spread about an imminent complete ban on cryptocurrencies in China in 2024, the new restrictions did not surprise investors, and the price of Bitcoin remained unchanged.

China's anti-cryptocurrency laws usually lead to widespread Bitcoin sell-offs, but will they inspire lawmakers in other countries to block cryptocurrencies in their own countries? Let's do a little fact checking.

Will other countries follow China's path regarding crypto regulation?

China is not responsible for crackdowns on cryptocurrencies around the world, nor is it a leader in an overtly hostile approach to decentralized digital money. However, as one of the most influential countries on Earth, it may seem like a role model for governments that do not want cryptocurrencies in their countries. Is this the case?

The answer is somewhat negative. China's influence makes anti-crypto laws impact the cryptocurrency market and news outlets. But we cannot say that the country's lawmakers are world leaders in the fight against cryptocurrencies.

Türkiye has banned cryptocurrency payments The next several months China in 2021. Egypt was created Legal obstacles For mining and trading cryptocurrencies in 2020. Algeria is banned Any activity Involving cryptocurrencies in 2018. Morocco Trading banned cryptocurrencies It was in 2017 when China took its first steps towards a complete ban on cryptocurrencies. It should be noted that as of January 2025, the Central Bank of Morocco is looking to legalize cryptocurrencies. Bangladesh Blocked encryption In 2014, following previous bans imposed by Bolivia and Ecuador.

After all these examples, it is not difficult to see that China is exploring the effects of cryptocurrency bans using the experiences of other countries rather than acting as a role model in this regard.