From the East and the West, regulatory headwinds are battering crypto markets.

Thanks to recent statements from China's top regulators, the crypto trade has been considerably frothier. Meanwhile, the Treasury Department recently announced that all crypto transactions over $10,000 must be reported to the IRS.

Meanwhile, top regulators in both countries are laying down the line and hinting at new lines that could be drawn in the future.

Last Tuesday, the Federal Reserve's Vice Chair of Supervision, Randal Quarles, told the Senate banking committee that the Fed and other regulatory agencies are in the midst of what he called a "sprint" to develop new regulations regarding the crypto space. And just the Friday prior, Vice Premier Liu He, Xi Jinping's right-hand man on the economy, pledged to "crackdown on bitcoin mining and trading behavior" to prevent risks to the "social field," according to the Wall Street Journal.

With headlines like these, it's little wonder Bitcoin has lost half its value since mid-April.

So far, US regulators have been aiming at tracking crypto-related transactions rather than blocking them. "Cryptocurrency already poses a significant detection problem by facilitating illegal activity, including tax fraud," said the Treasury Department said in a statement, quoted by CNBC.

Under the Treasury Department's new guidelines, cryptocurrencies will be treated like cash. Meaning that crypto-asset exchanges and banks will have to begin reporting inflows and outflows from individual accounts, as well as any crypto-related transactions over $10,000.

But further regulations could be on the horizon, given statements from Gary Gensler, the recently appointed chair of the U.S. Securities and Exchange Commission (SEC). "Right now, the exchanges trading in these crypto-assets do not have a regulatory framework," he told the Senate Banking Committee. "There is no market regulator, and thus there is really no protection against fraud or manipulation."

According to Raymond James analyst Ed Mills, such talk from Gensler and other top officials might be a short-term source of headline risk for crypto markets. "However, in the medium to long-term, regulation would add further legitimacy to the asset class," he told CNBC.

Meanwhile, China is hinting at plans to step up its own efforts to rein in cryptocurrencies, just as the country begins to roll out its own digital currency, the digital yuan.

In 2017, China banned cryptocurrency exchanges and initial coin offerings and simultaneously ordered the closure of crypto mining operations within the country's borders, WSJ reports.

But these bans are only theoretical. Thanks to VPNs and foreign cryptocurrency exchanges, Chinese crypto miners and traders can easily exchange their digital tokens for yuan, despite the government's ban.

At this point however, China has yet to lay out any new formal regulations. Nevertheless, the country's top banking associations and mobile payments providers have reiterated pledges to monitor individual accounts for any potential crypto-related activity.

It's worth noting that in 2018, only two mobile payment providers, Alipay and WeChat, handled $37 trillion (255 trillion yuan) in transactions. So, when the time for a formal crackdown comes, it will likely happen in either of those places.

Ahead of any new explicit regulations, crypto markets will have to base their expectations on vague statements from China's top officials. And until Vice Premier He's recent statement, regulators had rarely spoken of topics like crypto mining and social stability in the same breath.

These and other recent messages from officials "could signal the beginning of a series of new movements taken by the Chinese government to crackdown on crypto-related activities and angles," Shen Wenhao, a partner at JunZeJun Law Offices, told WSJ.