China continues to tighten crypto regulations. Do other countries take notes?

On the eve of 2025, the Chinese government issued new laws that greatly hindered cryptocurrency circulation in mainland China. This wasn’t China’s first attack on crypto. Is China a role model for other governments that do not want crypto in their countries?

New legal attacks on crypto in China

On December 31, 2024, China tightened its crypto regulations once again. This time, the foreign exchange regulator is forcing banks to flag all cross-border crypto-related transactions and block relevant parties from certain bank services. Banks are now required to monitor financial behavior deemed risky based on the identity of transaction participants, source of funds, frequency of transactions and other factors.

The regulation officially aims to provide control over risky financial activities. The State Administration of Foreign Exchange associates any transaction with crypto with risky financial behavior. Other transactions that fall into the restricted category include cross-border gambling transactions and transactions through underground banks.

The fact that banks will collect and report the information of people and institutions involved in these transactions adds a new dimension of risk to cryptocurrency transactions and gambling. Interested parties now face the risk of unwanted government attention, denial of service, and potential legal trouble in the long run.

The new regulations could seriously damage the Chinese cryptocurrency industry, which is already existing under extremely challenging conditions, and many prominent companies and entrepreneurs have already fled the country to establish their businesses elsewhere. Notable examples include Binance, the world’s leading crypto exchange, and Justin Sun, founder of Tron.

Most likely, the new crypto laws in China will be more hostile towards digital assets (except for CBDCs) in the future, while the latest regulations are fully in line with previous restrictions by Chinese authorities. China’s anti-cryptocurrency laws have not only affected mainland China, but have also managed to shake up the global crypto industry.

Previous anti-crypto laws and their global impact

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

At one point, China was the crypto capital of the world. The first crypto exchange, BTC China, started operating in 2011. In 2013, Baidu, one of China’s largest online services, began accepting payments in Bitcoin. The following year, groundbreaking BTC mining company Bitmain was founded in China. Growing totalitarian trends were pushing people to embrace cryptocurrency because it promised privacy and independence. It became clear that the government could not tolerate this technology for a long time because it weakened the dominance and control of the state.

The overall crypto regulatory journey in China can be seen as a gradual elimination of any means for private unregulated financial activities, while pushing institutions and individuals to use the digital yuan (e-CNY), a fully government-controlled asset.

2017 was the year China started looking into crypto platforms. In the first half of the year, many exchanges were under threat of closure for failure to comply with anti-money laundering laws. In September, China banned initial coin offerings amid the peak of the ICO bubble, dropping the BTC price by nearly 5%. While only a small percentage of projects funded through ICOs have been proven to have real value, a complete ban is not necessarily seen as the best solution. Both of these attacks on the crypto sector caused a significant drop in BTC prices in crypto markets around the world.

This does not prevent China from becoming the crypto mining capital of the world in the coming years. Reportedly in 2020, China mined 67% of all bitcoins. In 2021, this number dropped to zero when the State Council completely banned cryptocurrency mining in China. This move had some consequences; for example, it allowed the United States to become the world leader in mining.

Other attacks on the crypto sector in 2021 included bans on crypto trading and a series of closures of crypto exchanges. The news caused a 7% drop in Bitcoin price. The timing of the cryptocurrency crackdown coincides with new developments in the digital yuan, China’s CBDC project. As of November 2021, cryptocurrencies are effectively banned in China.

While rumors about the imminent completion of the crypto ban in China in 2024 circulated, the new restrictions did not catch investors off guard and the BTC price remained unaffected.

China’s anti-crypto laws often trigger BTC sell-offs, but are they inspiring lawmakers in other countries to block cryptocurrencies in their own countries? Let’s do a little fact check.

Are other countries following China’s lead when it comes to crypto regulations?

China is not responsible for the crackdown on cryptocurrencies around the world, nor is it leading a directly hostile approach towards decentralized digital money. Still, 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 quite negative. China’s influence makes anti-crypto laws effective for the crypto market and news outlets. However, we cannot say that the country’s legislators are world leaders in the fight against cryptocurrencies.

Türkiye banned crypto payments in 2021, a few months before China. Egypt introduced legal barriers to cryptocurrency mining and trading in 2020. Algeria banned all activities involving cryptocurrency in 2018. Morocco banned crypto trading in 2017, when China took its first steps towards a full cryptocurrency. Forbidden. It is worth mentioning that as of January 2025, the central bank of Morocco is trying to legalize cryptocurrency. Bangladesh banned cryptocurrencies in 2014, following earlier bans by Bolivia and Ecuador.

After all these examples, it is not difficult to say that China is investigating the effects of banning cryptocurrencies by using the experiences of other countries, rather than being a role model in this regard.