China Doubles Down: Offshore Crypto Trading Faces Unprecedented Crackdown

Beijing slams the hammer—again. China's latest offensive against offshore crypto trading platforms escalates the Great Firewall's financial blockade. No numbers, just cold, hard policy.

Decentralization? Not on their watch. While regulators elsewhere debate frameworks, the CCP cuts through the noise with blunt-force bans. Traders pivot to VPNs and OTC desks—for now.

Meanwhile, Wall Street's old guard chuckles into their bourbon. 'Risk-free' fiat systems looking shakier by the day, yet governments still treat crypto like a rogue spreadsheet. The irony? Priceless.

Global data sharing enables enforcement

The tax push follows rules put in place in 2018 called the Common Reporting Standard. This worldwide system shares financial information to catch people dodging taxes. Chinese laws have always said citizens must pay taxes on all their income from anywhere in the world, including profits from investments. But this rule was barely enforced until last year.

Through the Common Reporting Standard, China has been swapping account information automatically with almost 150 countries and territories. This exchange covers accounts owned by people who owe taxes in each member country. It’s been happening for several years now.

Record capital flight to Hong Kong

Money leaving China hit a record in July. Mainland investors bought Hong Kong assets hard after the government relaxed some market rules.

Banks in China sent a net $58.3 billion overseas last month for their customers who wanted to invest in securities, according to numbers by the State Administration of Foreign Exchange released in August. That’s the biggest monthly outflow since the government started keeping these records in 2010.

As Chinese companies put more money overseas, authorities face growing pressure to fill revenue gaps while stopping capital flight that could shake up the financial system.

Get $50 free to trade crypto when you sign up to Bybit now