Mainland China's Virtual Currency Regulatory Framework
Regarding the question of whether there are legitimate and legal virtual currency trading platforms in mainland China, the answer is clear: according to current Chinese laws and regulations, there are no "legitimate and legal" virtual currency trading platforms within mainland China. The Chinese government has adopted a policy of comprehensive prohibition on virtual currency trading and related activities.
Comprehensive Prohibition of Virtual Currency-Related Businesses
In September 2021, the People's Bank of China and nine other departments jointly issued a notice, explicitly stating that all virtual currency-related business activities, including fiat currency-to-virtual currency exchange, virtual currency-to-virtual currency exchange, 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, are illegal financial activities and are strictly prohibited and will be shut down according to law. The notice also specifically emphasized that overseas virtual currency exchanges providing services to Chinese residents via the internet also constitute illegal financial activities.
Subsequently, on February 6, 2026, the People's Bank of China and seven other departments jointly issued the "Notice on Further Preventing and Disposing of Risks Related to Virtual Currencies" (Document No. 42), reiterating that virtual currency-related business activities are illegal financial activities and are strictly prohibited within China. This notice continued and strengthened the existing regulatory approach and added restrictions on domestic entities and their controlled overseas entities issuing virtual currencies abroad.
Prohibition of "Mining" Activities
China continues to crack down on virtual currency "mining" activities, comprehensively investigating and shutting down existing projects, and strictly prohibiting new "mining" projects.
Enterprise Name Restrictions and Legal Liability
The registered names and business scopes of enterprises and individual businesses must not contain terms or content such as "virtual currency," "virtual assets," "cryptocurrency," or "crypto assets." Domestic entities and individuals engaged in illegal financial activities related to virtual currencies, or those who knowingly or should have known that overseas entities are illegally providing virtual currency services to China and still provide assistance, will be held accountable according to law, and those constituting a crime will be investigated for criminal liability according to law.
Current Status of Personal Virtual Currency Holdings
As of the end of 2024, mainland China's laws and regulations do not explicitly prohibit individuals from purchasing and holding cryptocurrencies as virtual commodities. However, this is predicated on the condition that the source of funds must be legal, not violate foreign exchange control regulations, and not involve illegal fundraising, fraud, money laundering, or other illegal criminal activities. It should be noted that contracts signed by individuals with trading platforms for buying and selling cryptocurrencies may be deemed invalid by courts in judicial practice.
Main Considerations Behind the Regulation
The Chinese government implements strict regulatory policies primarily based on the following considerations:
- Maintaining Financial Stability and National Security: Virtual currency trading and speculation activities are believed to disrupt economic and financial order, easily giving rise to illegal criminal activities such as gambling, illegal fundraising, fraud, pyramid schemes, and money laundering, posing a threat to financial stability and national security.
- Energy Consumption and Carbon Emission Reduction Goals: Cryptocurrency "mining" activities consume a large amount of electricity, which is inconsistent with China's set carbon emission reduction targets.
- Supporting the Development of Digital Yuan: The ban is also seen as aiming to eliminate competition and market chaos for China's ongoing central bank digital currency (digital yuan) development, ensuring its smooth promotion.
Impact on the Market and Exchanges
Mainland China's regulatory policies have had a significant impact on the global cryptocurrency market. For example, after the People's Bank of China issued the ban in September 2021, the crypto market experienced significant fluctuations within 24 hours, with Bitcoin prices falling sharply in a short period. Entering February 2026, affected by factors such as reduced digital asset liquidity, Bitcoin prices once fell below the $70,000 mark, nearly halving from their historical high in October 2025.
Affected by this policy, several major virtual currency exchanges, including Huobi, Binance, OKEx, and Gate.io, announced after the 2021 ban that they would cease providing services to mainland Chinese users and conducted user clear-outs. Industry insiders generally believe that under the current regulatory backdrop, virtual currency exchanges will only be able to shift their focus to overseas business in the future to seek compliant development.
