TechFlow news — Xuan Changneng, Deputy Director of the State Administration of Foreign Exchange, wrote in the magazine "China Finance" that the digitization of cross-border funds poses challenges to the current foreign exchange regulatory framework. As Bitcoin prices surge and various cryptocurrencies gain market popularity, trading volumes have rapidly expanded. Cryptocurrencies possess features such as "anonymity," fast transaction speed, low transaction costs, and flexible transaction methods. Trading platforms are mostly located overseas, with complex, multi-layered transaction entities, making fund sources and destinations obscure and difficult to monitor and identify. This makes cryptocurrencies prone to being used as channels for illegal cross-border asset transfers. For example, market participants may convert RMB into Bitcoin domestically, sell the Bitcoin to overseas parties via the internet, and receive corresponding foreign currency in overseas accounts, thereby achieving a "matching-trade" style of cross-border transaction. Currently, there is a lack of regulatory basis for cryptocurrencies, making it difficult to bring them under foreign exchange regulation, which objectively allows cryptocurrency cross-border transactions to operate outside the scope of foreign exchange oversight.
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