China’s new rules require banks to flag risky transactions, including those involving crypto, making it harder for mainland investors to trade digital assets.

China‘s foreign exchange regulator, the State Administration of Foreign Exchange, has rolled out new rules requiring banks to keep a closer eye on transactions involving digital assets, the South China Morning Post has learned, citing the regulator’s announcement.

The rules, applicable to local banks in mainland China, focus on identifying “risky foreign exchange trading behaviors,” the report reads. These include underground banking, cross-border transactions involving crypto, and illegal financial activities.

Banks now have to track transactions by checking things like who’s involved, where the money is coming from, and how often the trades are happening. Additionally, Chinese banks are also expected to create risk-control measures for these entities and limit their access to certain services, the report says.

The new rules are part of China’s push to tighten control over crypto, including Bitcoin trading and mining, which officials see as a risk to financial stability.

China has taken a tough stance on crypto over the years. Back in 2017, Beijing banned initial coin offerings and shut down domestic crypto exchanges to prevent financial risks. By 2021, things escalated with a full ban on crypto trading and mining. Despite these restrictions, it’s still technically legal for individuals to hold digital assets, though the gray areas in regulation keep things complicated.