Overview of China Mainland's Virtual Currency Regulatory Policies
Since February 2026, the "Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies" jointly issued by the People's Bank of China and seven other departments explicitly states that all virtual currency-related business activities are considered illegal financial activities and are strictly prohibited within the country. This includes the exchange between fiat currency and virtual currency, exchanges between virtual currencies, buying and selling virtual currencies as a central counterparty, and providing information intermediary and pricing services. Simultaneously, overseas institutions and individuals are also prohibited from illegally providing virtual currency-related services to entities within mainland China in any form.
Although the Songjiang Court in Shanghai confirmed in a November 2024 ruling that cryptocurrencies are protected by law as "virtual property" and that personal holding is not illegal per se, all commercial activities related to cryptocurrencies, including operating exchanges and providing trading services, are deemed illegal financial activities. This means that any attempt to provide or participate in virtual currency trading services within mainland China will face severe legal risks.
Risks for Individuals Participating in Virtual Currency Trading
Under the current strict regulatory environment, residents of mainland China who attempt to participate in virtual currency trading through unofficial, non-compliant channels will face multiple risks:
- Legal Risks: Participation in illegal financial activities may lead to legal liabilities, including but not limited to administrative penalties, fines, and even criminal responsibility.
- Fund Security Risks: Illegal trading platforms and channels lack supervision and are subject to risks such as exit scams, fraud, and technical vulnerabilities, making it difficult to guarantee the security of user funds. For example, Shanghai police cracked down on multiple cases of illegal operations and money laundering using virtual currencies in August 2026, involving huge sums of money, highlighting the risks of such activities.
- Bank Card Freezing Risks: Fiat currency exchange through peer-to-peer (P2P) transactions may lead to personal bank cards being frozen due to involvement in illegal funds or money laundering activities, affecting normal financial services.
- Policy Uncertainty: Regulatory policies may be further tightened, and future restrictions and crackdowns on individual participation in trading may increase.
International Mainstream Trading Platforms and Compliance Considerations
Globally, there are numerous regulated or legally operating cryptocurrency trading platforms in specific jurisdictions, such as Binance, OKX, Kraken, Bybit, MEXC, Bitget, and KuCoin. These platforms typically offer spot trading, futures trading, fiat currency deposits and withdrawals, and comply with local financial regulations in different countries and regions.
However, for residents of mainland China, even if these platforms operate legally in other countries, they cannot circumvent mainland China's regulatory prohibitions. Some platforms may have previously supported mainland Chinese ID verification or RMB P2P transactions, but with the tightening of regulatory policies, such services have been strictly restricted. For example, Hong Kong's Bitcoin spot ETFs are explicitly not open to mainland Chinese investors.
Important Note: This article is for informational purposes only and does not constitute investment advice. Given mainland China's strict restrictions on virtual currency trading, residents of mainland China must comply with local laws and regulations and refrain from attempting to participate in virtual currency trading activities through any channels to avoid unnecessary legal and financial risks. For readers in other countries and regions, please ensure compliance with the laws and regulations of your jurisdiction and conduct transactions under legal and compliant premises.
