Overview of Cryptocurrency Regulatory Policies in Mainland China
Since 2021, mainland China has completely banned virtual currency trading and mining activities. This ban continued to be strictly enforced in 2023 and beyond, with any business activities related to virtual currencies being explicitly identified as illegal financial activities. Furthermore, even if overseas virtual currency exchanges provide services to residents within China via the internet, it is considered an illegal act. This means that, at the legal and policy level, there is no officially recognized or legally operating cryptocurrency market within mainland China, and therefore no "domestic cryptocurrency rankings" or "virtual currency lists" can be generated.
Blockchain Technology Development and Digital Yuan in Mainland China
Despite its prohibitive stance on cryptocurrency trading, mainland China continues to invest in blockchain technology innovation and industrial development. In 2023, China steadily advanced the application of blockchain technology in various fields such as government services, judicial evidence preservation, financial technology, and livelihood optimization, aiming to provide technological impetus for the construction of a digital China. This stands in stark contrast to the speculative nature of cryptocurrencies.
Meanwhile, the People's Bank of China (PBOC) orderly promoted the pilot work of the digital yuan (e-CNY) in 2023 and continued to expand its application scenarios. As of the end of the first half of 2023, the number of individual digital yuan wallets opened reached 120 million, with a total wallet balance of 16.5 billion RMB, cumulative transaction amount reaching 1.8 trillion RMB, and 950 million transactions. As a legal digital currency, the digital yuan's development goal is to improve payment efficiency and convenience, rather than serving as an investment or speculative asset. Relevant progress can be followed in Svmuu's continuous reports.
Differences Between Hong Kong SAR's Virtual Asset Regulation and Mainland China's Policies
It is worth noting that the Hong Kong Special Administrative Region of China established a new "Virtual Asset Service Provider (VASP) license" system in 2023, allowing licensed virtual currency platforms to provide trading and custody services to investors under a compliant framework. This indicates that Hong Kong has adopted a different path in virtual asset regulation compared to mainland China, aiming to build a regulated virtual asset market. However, Hong Kong's policies do not apply to mainland China.
Mainland Chinese Investors and Overseas Cryptocurrency Activities
Despite strict prohibitions, some mainland Chinese investors may still participate in overseas cryptocurrency activities through foreign exchanges and VPNs. According to Chainalysis data, Chinese traders made a net profit of $86 billion from cryptocurrency activities between July 2022 and June 2023. However, such activities still face legal and policy risks in mainland China, and the Chinese government's global tax pursuit actions on overseas assets (including cryptocurrency profits) are also underway. Therefore, for residents of mainland China, participating in virtual currency trading carries significant compliance risks.
