Legal Status and Regulatory Landscape of Virtual Currency Trading in Mainland China
Regarding questions such as "which is the best virtual currency exchange to use in China" and "legal virtual currency trading software," it is crucial to clarify that, according to current laws and regulations in mainland China, there are no "legal" or recognized virtual currency exchanges. The Chinese government has adopted a strict prohibition policy on virtual currency trading and related activities.
Comprehensive Prohibition and Continuous Strengthening of Regulation
Since September 2021, the People's Bank of China (PBOC), in conjunction with nine other departments, issued the "Notice on Further Preventing and Disposing of Risks Associated with Virtual Currency Trading and Speculation." This notice explicitly states that virtual currency-related business activities are illegal financial activities and are strictly prohibited within the country. This covers a wide range of activities, including the exchange between fiat currency and virtual currency, the exchange between virtual currencies, buying and selling virtual currencies as a central counterparty, providing information intermediary and pricing services, token issuance financing, and virtual currency-related financial product trading.
Furthermore, overseas virtual currency exchanges providing services to mainland Chinese residents via the internet are also deemed illegal financial activities. Chinese authorities continue to strengthen monitoring of such activities and pursue criminal liability for those engaged in illegal financial activities.
Regulatory efforts have continuously intensified in recent years. For example, in November 2025, the People's Bank of China (PBOC) led 13 departments in convening a "Working Coordination Mechanism Meeting to Combat Virtual Currency Trading and Speculation," reiterating the illegality of virtual currency-related businesses and for the first time clarifying the definition and risks of stablecoins. By February 2026, the People's Bank of China (PBOC) and eight other departments jointly issued another document, further clarifying relevant prohibitions and forbidding any domestic or foreign entities or individuals from issuing RMB-pegged stablecoins overseas without consent, as well as prohibiting domestic entities and their controlled overseas entities from issuing virtual currencies overseas. Concurrently, enterprise and individual business registration names and business scopes must not contain terms such as "virtual currency" or "digital assets."
Legal Definition and Risk Warning for Virtual Currencies
In mainland China, virtual currencies do not possess the same legal status as fiat currency, lack legal tender status, and should not and cannot be circulated or used as currency in the market. Bitcoin and other virtual currencies are defined as "specific virtual commodities," rather than currencies or financial investment products. This means they are not considered legally protected financial investment tools.
The Chinese government emphasizes that virtual currency trading and speculation disrupt economic and financial order and give rise to illegal and criminal activities such as gambling, illegal fundraising, fraud, pyramid schemes, and money laundering. The anonymity, cross-border nature, and detachment from traditional regulatory systems of virtual currencies make it difficult to implement compliance requirements such as customer identification and anti-money laundering, thereby increasing risks.
International Exchanges' Response and Potential Risks
Following the tightening of regulatory policies in mainland China in 2021, major international virtual currency exchanges, such as Binance (Binance), OKX, and HTX (HTX), have all announced the cessation of services to mainland Chinese users and have gradually phased out mainland Chinese users. For example, HTX closed deposit functions for mainland Chinese users in December 2021 and delisted OTC RMB trading. Binance also delisted the CNY trading zone during the same period and switched mainland Chinese user accounts to a "withdrawal-only" mode. OKX stated that its business focus has shifted to the international market since 2017 and does not target mainland China for promotion and services.
Despite strict prohibitions, some mainland Chinese users may still participate in virtual currency trading through unofficial channels (e.g., using VPNs to access overseas exchanges and purchasing stablecoins through C2C peer-to-peer transactions). However, these operations carry extremely high legal and financial risks. Chinese payment platforms such as Alipay and WeChat Pay explicitly prohibit cryptocurrency-related transactions and monitor suspicious activities. Therefore, any attempt to circumvent regulation may lead to severe legal consequences and property losses.
Differentiated Regulation in Hong Kong
It is worth noting that, unlike the strict prohibition policy in mainland China, the Hong Kong Special Administrative Region is establishing a regulated framework for digital assets. This move by Hong Kong may allow it to play a unique role between global cryptocurrency innovation and mainland China's strict controls, but its regulatory framework is completely independent of mainland China.
