Chinese authorities are ramping up their crackdown on the use of cryptocurrencies for illegal foreign exchange (forex) trading, highlighting concerns about financial risks and national security.
In a joint statement, the Supreme People’s Procuratorate (SPP) and the State Administration of Foreign Exchange (SAFE) called for enhanced supervision and stricter penalties against individuals and groups engaging in such activities.
The announcement specifically emphasized cases involving Tether, a popular stablecoin often used as a bridge between traditional currencies and cryptocurrencies.
Two high-profile cases involving Tether were cited, including one where a trader converted millions of UAE dirhams to yuan through Tether, pocketing significant profits.
The authorities stressed that converting yuan to cryptocurrency and vice versa remains illegal in China. Furthermore, anyone providing technical support for such activities, such as building websites for illegal forex trading, will be considered accomplices and face legal consequences.
This renewed crackdown is part of China’s ongoing efforts to tighten control over its financial system and combat illicit cross-border transactions.
The SAFE pledged to continue its “heavy-handed crackdown” on illegal forex activities, while the SPP outlined eight specific “typical cases” to serve as examples for stricter enforcement.
Despite the ban on cryptocurrency trading and mining, China remains a significant market for cryptocurrencies, with a large volume of transactions occurring underground.
Traders exploit the price discrepancies between foreign currencies and cryptocurrencies to launder money and avoid regulations.
The recent bust of a 15.8 billion yuan money laundering ring in Qingdao involving illegal forex trading using cryptocurrencies underscores the severity of the issue and China’s determination to address it.
The increased scrutiny and potential for hefty fines and imprisonment are likely to further deter such activities in the future.
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