Overview of Mainland China's Cryptocurrency Trading Policies
Since 2021, mainland China has adopted a comprehensive ban on cryptocurrency trading. The People's Bank of China and other relevant departments have explicitly stated that virtual currencies do not possess the legal status of fiat currency, and all business activities involving virtual currencies, including trading, issuance, and mining, are considered illegal financial activities. Furthermore, overseas virtual currency exchanges providing services to residents within China via the internet are also explicitly identified as illegal financial activities.
Entering 2026, regulatory efforts intensified. In February, China expanded the ban to explicitly prohibit Real World Asset (RWA) tokenization and unauthorized offshore RMB-pegged stablecoins. Starting in April of the same year, online platforms promoting cryptocurrency trading and other illegal financial activities were also banned.
Legal Status and Risks of Personal Holdings and Trading
Despite the strict prohibition on trading activities, the legal status of personal cryptocurrency holdings differs. According to a ruling by the Shanghai Songjiang Court in November 2024, cryptocurrencies are recognized as "virtual property" under Chinese law, meaning that merely holding cryptocurrencies is not illegal.
However, individuals participating in "crypto speculation" activities remain in a gray area. Judicial practice indicates that if individuals buy and sell for the purpose of personal asset appreciation and do not cross the "business operation" red line (e.g., providing services to others, charging fees), it typically does not constitute the crime of illegal business operations. But this does not mean that trading is legal or risk-free.
Significant risks exist when exchanging fiat currency for cryptocurrencies via P2P (peer-to-peer) methods. Due to the potential involvement of illicit activities in the counterparty's fund sources, individuals participating in P2P transactions face the risk of their bank cards being frozen. In November 2025, the People's Bank of China designated stablecoin activities as a new enforcement priority, further highlighting the risks associated with such transactions.
Promotion of Digital RMB
In contrast to the strict regulation of decentralized cryptocurrencies, China is vigorously promoting its state-backed digital currency—the Digital RMB (e-CNY). The Digital RMB is positioned as the preferred choice for a centralized, regulated digital financial system. Starting January 1, 2026, interest began to accrue on Digital RMB wallet balances, marking its upgrade from a cash-type 1.0 version to a deposit-currency-type 2.0 version.
As of the end of November 2025, the Digital RMB had cumulatively processed 3.48 billion transactions, with a total transaction value reaching 16.7 trillion RMB. The number of individual wallets opened reached 230 million, and institutional wallets numbered 18.84 million.
Hong Kong Special Administrative Region's Different Strategy
The Hong Kong Special Administrative Region, with its independent legal and financial systems, has adopted a different regulatory approach to cryptocurrencies. The Hong Kong Securities and Futures Commission (SFC) has granted licenses to virtual asset trading platforms such as HashKey Exchange and OSL, providing regulated trading services for institutional and eligible retail investors. Hong Kong's regulatory framework aims to provide a clear compliance path for the virtual asset market, but its services are primarily targeted at Hong Kong residents and eligible global investors.
