- The new proposal will replace the China Banking and Insurance Regulatory Commission with the National Financial Regulatory Administration (NFRA), strengthening the mainland’s position to control the financial industry
- The new regulation does not explicitly talk about crypto, but many believe that crypto investors will likely to Hong Kong due to the mainland’s restriction
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China has introduced a more robust plan that regulates the mainland’s financial sector by abolishing the China Banking and Insurance Regulatory Commission and replacing it with the National Financial Regulatory Administration (NFRA).
The new proposal was presented on Tuesday’s Chinese National People’s Congress sidelines.
Under the new proposal, if the legislature approves it on March 10, Beijing will strengthen its supervision in the financial sector in terms of the institutions, behavior, and functions.
Also, the People’s Bank of China will expand its branches to 36 from nine, responsible for the mainland’s monetary policy.
The proposal will restructure the Ministry of Science and Technology and apply a more intense reform in the financial regulatory system.
One of the most anticipated issues will be the crypto-related one. Previously, China banned almost cryptocurrency transactions in 2021.
However, the new financial regulation proposal does not explicitly regulate crypto. Still, many believe the state administration will entirely control the Chinese securities markets.
China’s complex relationship with cryptocurrencies
Despite the ban on cryptocurrency transactions, China has been disbursing millions in setting up its central bank digital currency (CBDC), the digital yuan.
Also, China is East Asia’s top cryptocurrency market in terms of transaction and turnover, the report from Chainalysis revealed.
The total crypto-related transaction recorded between June 2021 and July 2022 hit more than $ 220 billion, thanks to the use of VPN to provide a secure cryptocurrency transaction.
Therefore, many crypto investors predict that the ban and the new financial rule will not effectively prohibit crypto-related transactions.
Yet, the new financial regulation will likely drive crypto investors and users to the mainland’s special administrative region, Hong Kong.
The Chainalysis report stated that Hong Kong is East Asia’s fourth most robust crypto market.
In Hong Kong, cryptocurrency is stipulated in the Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Ordinance 2022.
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