Chinese government to revise laws to deal with virtual currency money laundering

Money laundering prevention law to be revised

China plans to revise anti-money laundering (AML) laws to address risks associated with crypto assets (virtual currencies). The South China Morning Post reported on the 15th.

A meeting of the State Council chaired by Chinese Premier Li Qiang is discussing a draft amendment to the current AML law, which has been in force since 2007, and will submit it for review by the National Assembly.

Although the full text of the amendment has not been made public, Wang Xin, a professor at Peking University Law School who is participating in the discussion, said the main purpose of the amendment is to combat new types of money laundering.

Andrew Fei, a partner at Hong Kong law firm King & Wood Mallesons, comments on the law reform as follows:

He also pointed out that although virtual currencies and related activities are prohibited in China, the cross-border and decentralized nature of virtual currencies could still have a direct or indirect impact on China.

China has been tightening its ban on virtual currency trading and mining since 2021, and has recently strengthened its crackdown on foreign currency exchange using virtual currencies.

There are a number of cases in which businesses that have made profits by exchanging the renminbi with other countries' legal currencies through stable coins such as USDT have been exposed for “evading government foreign exchange monitoring.''

connection:
China strengthens crackdown on foreign currency exchanges such as virtual currency Tether (USDT)

Virtual currency trading becomes active even under crackdown

China is keeping a close eye on virtual currencies, with the Governor of the People's Bank of China announcing last October that he would thoroughly crack down on speculative activities such as virtual currency trading.

However, even under these circumstances, some Chinese people's desire to invest in virtual currencies remains strong. Companies are circumventing regulations by using VPNs (virtual private networks) to access overseas exchange accounts that were opened before the ban was imposed, or by conducting face-to-face P2P transactions.

It is also reported that virtual currency activity is becoming more active while Chinese stocks are sluggish. It has also been confirmed that there are Chinese investors using Hong Kong as a contact point where virtual currency trading is permitted.

connection:
A number of Chinese investors are shifting their focus to virtual currencies following the severe slump in Chinese stocks = report

The Hong Kong authorities have taken a proactive stance towards virtual currencies, and have begun accepting applications for virtual currency spot ETFs. At the end of January, China's long-established major fund “HFM'' applied for a Bitcoin (BTC) spot ETF.

Hong Kong's Securities and Futures Commission is reportedly planning to approve and list Bitcoin ETF applications from February onwards.

connection:
Hong Kong's first Bitcoin ETF to be listed on China's long-established major fund “HFM”

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