Xuan Changneng, the dep. director of the state administration for Foreign Exchange recently raised concerns over the illegal transfer of assets overseas via bitcoin as the price of the top cryptocurrency soared to a new all-time high a couple of weeks ago.
Important information：Xuan Changneng, deputy director of State Administration of Foreign Exchange, pointing out that as the price of Bitcoin soars, China is facing the problem of illegally transferring assets overseas using crypto. https://t.co/TQKmmmbPBc
— Wu Blockchain (@WuBlockchain) January 20, 2021
Xuan’s comment came via an official blog titled ‘China Finance: Applying Technology to Enhance the Effectiveness of Foreign Exchange Supervision.’ Xuan while talking about the recent trend of rising BTC price and Chinese traders using to transfer funds overseas wrote,
“Market entities convert RMB into bitcoins in China, sell bitcoins to overseas parties via the Internet, and collect corresponding foreign currencies in overseas accounts, thereby realizing “spinning” cross-border transactions. Currently, there is no regulatory basis for a cryptocurrency(in China) and it is difficult to be included in the scope of foreign exchange supervision, which objectively leads to cross-border transactions of cryptocurrency outside of foreign exchange supervision.”
Dep. Director Calls For Crackdown on illegal Foreign Exchange Activities
Bitcoin and other cryptocurrency are banned in China since 2014 and in 2017 the country also closed down cryptocurrency exchanges operating in the country. With the prime focus on its national digital currency called digital yuan and its upcoming launch, China is currently realizing what many western countries did long ago, that it is impossible to ban the use of Bitcoin.
Xuan in his official blog has urged the state government to learn from the likes of the United Kingdom sandbox program for crypto regulations, and begin a crackdown on illegal foreign exchange activities. He wrote,
“China needs to learn from the experience of the “regulatory sandbox” pilots in the United Kingdom, Singapore, and other countries; and severely cracking down on illegal foreign exchange activities such as underground banks and cross-border gambling.”
China being an authoritarian state did not want the likes of decentralized currencies such as bitcoin and other digital assets to penetrate its existing financial system, however by completely banning its use rather than regulating it, they are currently facing the problem of illegal transfer of assets via BTC. The Chinese government has gone after crypto service providers in the country on several occasions, however, tracking underground trades and banks are easier said than done.