China is intensifying its efforts to tighten control over cryptocurrency activities by introducing new rules that mandate banks to monitor and flag risky transactions, including those involving digital assets.

According to South China Morning Post’s report, the country’s foreign exchange regulator - the State Administration of Foreign Exchange (SAFE) - has introduced new rules that require banks to closely monitor and flag risky transactions, including those involving digital assets like Bitcoin.

Under the new regulations, banks must keep a watchful eye on activities, such as underground banking, cross-border gambling, and crypto-related transactions. They’ll need to track details like who’s involved, where the money is coming from, and how often trades are happening. If anything looks suspicious, banks are expected to take action, including restricting services to the entities involved.

This is yet another step in Beijing’s ongoing crackdown on cryptocurrencies, which the government sees as a potential threat to financial stability. Trading and mining of digital assets have already faced strict regulations, and this latest move only deepens the restrictions.

Liu Zhengyao, a lawyer at Shanghai-based ZhiHeng law firm, described the new rules as a solid legal framework to clamp down on crypto trading. According to Liu, using the yuan to purchase cryptocurrencies and then converting them to foreign currencies could now be considered illegal, especially if the amounts exceed legal limits.

For those hoping to sidestep China’s foreign exchange laws using crypto, these new measures will make it much harder, Liu said, predicting that regulations around digital assets will continue to tighten in the coming years.