The Ministry of Public Security of China promotes a new law to regulate the illegal diversion of cryptocurrencies

The Chinese Ministry of Public Security recently announced a new bill concerning cybercrime prevention and is seeking public comments. This regulatory proposal is attracting attention as an important measure to strengthen the fight against illegal activities using virtual currencies. According to NS3.AI’s report, the bill introduces strict handling regulations aimed at virtual currencies suspected of being related to illegal activities.

Strengthening Prevention of Cryptocurrency Crimes is the Focus

The core of the new bill is addressing virtual currencies related to illegal activities. It explicitly prohibits individuals and organizations from concealing, transferring, acquiring, or disposing of virtual currencies that may be linked to crimes. This indicates China’s policy to apply strict regulations, similar to those for traditional financial transactions such as money laundering and terrorist financing, to cryptocurrencies as well.

Explicitly Prohibiting Concealment and Transfer of Illegal Funds

The bill emphasizes preventing the liquefaction of improperly obtained or crime-derived funds through virtual currencies. Providing payment and remittance services using virtual currencies proven to have originated from illegal activities is also expected to be prohibited. This measure aims to cut off the flow of funds through non-regular routes such as the dark web and P2P transactions.

Limiting Transactions of Crime-Derived Virtual Currencies

China’s cryptocurrency regulations are known for being strict. The new bill is likely to delve deeper into these existing regulations and may impose responsibilities on cryptocurrency exchanges and wallet providers to prevent the influx of criminal funds. With expectations for enhanced compliance requirements across the industry, the ripple effects on the cryptocurrency market will also be closely monitored.