An Overview of Cryptocurrency Regulation in Mainland China
Since 2021, Mainland China has significantly tightened its regulatory policies on cryptocurrency, explicitly prohibiting all cryptocurrency-related trading activities. The People's Bank of China (PBOC), and other government agencies have classified the provision of services such as cryptocurrency trading, derivatives trading, and initial coin offerings (ICOs) as illegal financial activities. This stance has been consistently reinforced in subsequent regulatory actions.
Regulatory Policies and Legal Framework
- Comprehensive Ban: In 2021, Mainland China officially imposed a comprehensive ban on all cryptocurrency trading activities. Since then, any provision of cryptocurrency trading services within China has been illegal.
- Continued Tightening: As of July 2026, the Governor of the People's Bank of China (PBOC) had explicitly stated in October 2025 that relevant policy documents dating back to 2017 “remain in effect” and that the authority would continue to crack down on domestic virtual currency operations while closely monitoring offshore stablecoins.
- Crackdown on OTC Trading: Over-the-counter (OTC) trading, once considered a “gray area,” is now explicitly classified as an illegal financial activity and subject to severe criminal penalties.In February 2026, the People's Bank of China (PBOC) and the Ministry of Public Security jointly issued a decree explicitly extending the ban to the tokenization of real-world assets (RWAs) and stablecoins pegged to offshore renminbi.
- Crackdown on Cross-Border Financial Activities: In May 2026, the China Securities Regulatory Commission announced that it would impose penalties on offshore brokerage firms involved in cryptocurrency-related activities and set a two-year deadline to eliminate all unauthorized cross-border securities, futures, and fund management activities.This directly impacted how Chinese traders accessed the cryptocurrency market through major channels such as OTC, P2P, and USDT deposits and withdrawals.
Legal Risks Associated with Individual Cryptocurrency Holdings
Although all cryptocurrency-related commercial activities are prohibited, individual ownership of cryptocurrency is not explicitly illegal. However, such assets are not protected under Chinese law, and related contracts (such as lending and investment agreements) may be deemed invalid. This means that in the event of a dispute or loss of assets, individuals will find it difficult to seek legal protection.
Overseas Platforms and Cross-Border Transactions
Under the ban, some residents of mainland China may still attempt to access overseas cryptocurrency trading platforms—such as Binance (Binance), OKX, Kraken, MEXC, HTX, and Gate—via virtual private networks (VPNs).Some platforms, such as OKX and Kraken, have historically offered simplified Chinese interfaces or accepted Mainland Chinese identification documents for KYC (Know Your Customer) verification.However, under Chinese regulations, overseas cryptocurrency exchanges providing services to Chinese residents also constitute illegal financial activities. Therefore, Chinese residents who trade through these platforms not only face risks associated with the platforms themselves but may also violate Chinese law, resulting in the freezing of assets or criminal penalties.
Hong Kong’s Special Status
It is worth noting that Hong Kong, as a Special Administrative Region of the People’s Republic of China, has an independent legal and regulatory system. Hong Kong is actively establishing a regulatory framework for cryptocurrencies, and several licensed cryptocurrency exchanges are already operating there, such as HashKey Exchange. This stands in stark contrast to the blanket ban in mainland China and provides global investors with a compliant avenue for trading crypto assets.
Market Impact and Historical Overview
Prior to the 2017 ban, China was the world’s largest cryptocurrency market, with Bitcoin’s trading volume once accounting for 80% of the global total.The blanket ban led to a significant decline in Bitcoin hashrate, with many miners relocating outside of China. Despite this, the Bitcoin network remains secure and operational. As of September 2, 2025, the Chinese government still holds approximately 194,000 Bitcoin, estimated to be worth at least $17.6 billion; however, this is unrelated to the trading activities of the general public.
Risk Warning
Given mainland China’s strict cryptocurrency regulatory policies, any participation by Chinese residents in trading Bitcoin, USDT, or other cryptocurrencies carries significant legal and financial risks. All readers are advised to strictly comply with local laws and regulations and to fully understand the associated risks.
