Overview of Virtual Currency Regulatory Policies in Mainland China
Since September 2021, ten departments, including the People's Bank of China (PBOC), jointly issued a notice explicitly defining virtual currency-related business activities (including trading, issuance financing, and providing matching services) as illegal financial activities. The notice specifically emphasized that overseas virtual currency exchanges providing services to Chinese residents via the internet also constitute illegal financial activities. Subsequently, in February 2026, relevant departments reiterated the strict prohibition of virtual currency and real-world asset tokenization activities within China, and stated that they would hold domestic entities and individuals assisting in the provision of illegal overseas services accountable. Furthermore, virtual currency "mining" activities have been listed as an industry to be eliminated.
Affected by this policy, major cryptocurrency trading platforms, including Binance, OKX (formerly OKEx), and HTX (formerly Huobi Global), have announced their withdrawal from the mainland Chinese market, ceasing new user registrations and liquidating existing user accounts. For example, Binance has switched mainland Chinese users' accounts to a "withdrawal-only" mode.
It is worth noting that, according to an article published by the Shanghai High People's Court in November 2024, simply holding virtual currency by individuals may not be illegal. However, participating in token issuance financing, trading speculation, and other activities remains illegal, and any losses incurred therefrom shall be borne by the individual. Those suspected of disrupting financial order will be investigated and dealt with according to law.
The Reality and Risks of "Access Methods" for Mainland Chinese Users
Despite strict regulatory policies, demand for cryptocurrencies still exists among mainland Chinese users. Some users attempt to trade by using VPNs to access overseas trading platforms or by utilizing P2P (peer-to-peer) trading models to buy and sell cryptocurrencies. P2P trading allows users to directly buy and sell cryptocurrencies among themselves, with the platform merely acting as a bridge connecting buyers and sellers. For example, OKX and Binance's P2P platforms previously offered services for trading cryptocurrencies like USDT with Chinese Yuan (CNY) and supported various local payment methods.
However, for mainland Chinese residents, regardless of the method used to participate in virtual currency transactions, they face significant legal and financial risks. Chinese regulatory agencies explicitly classify such activities as illegal financial activities, which means participants may face legal prosecution, and their asset security cannot be protected by law. Platforms mentioned in the market, such as Kraken, MEXC, Gate, and Bybit, although they may support KYC with mainland Chinese passports or provide Chinese language services, conducting transactions through these platforms is still an illegal act for mainland Chinese residents.
Therefore, for mainland Chinese users, any trading behavior attempting to circumvent regulatory prohibitions carries extremely high uncertainty and risks, including but not limited to asset freezing, legal sanctions, and counterparty risks. Before performing any operations, users must fully understand and comply with local laws and regulations.
Market Outlook and Compliance Challenges
Although there have been rumors in the market about China potentially relaxing its cryptocurrency ban (e.g., speculation in July 2024 about lifting the ban in Q4), these rumors lack official confirmation. Analysts generally believe that a significant relaxation of regulations in mainland China is unlikely in the short term, as its primary goals remain preventing capital outflow and maintaining financial stability. Globally, cryptocurrency exchanges with Chinese backgrounds are facing increasingly stringent compliance requirements to ensure their legal operation in the global market. The policy direction of mainland China, as an important "hidden player" in the cryptocurrency field, will continue to have a profound impact on the global industry.
