Cryptocurrency in China

China maintains one of the most intricate positions regarding cryptocurrency among all nations. The nation that used to serve as a center for mining and trading now maintains strict prohibitions against private cryptocurrency participation. The Chinese government's crackdown on cryptocurrency has not stopped millions of citizens from operating in unregulated markets that involve cryptocurrency use. The government supports blockchain technology while launching their central bank digital currency named Digital Yuan (e-CNY).

Crypto Adoption in China: A Shadow Market

Chinese citizens continue to adopt cryptocurrency even though the government has implemented a regulatory ban. The second-biggest crypto-asset holding population worldwide after India consists of 59 million Chinese citizens. The majority of crypto activities take place either beneath the surface or outside Chinese national borders.

Common Use Cases of Crypto Include:

Offshore trading via VPNs on platforms like Binance and OKX
People conduct peer-to-peer (P2P) and OTC trades that utilize USDT as a settlement currency.
Users send international remittances through Tether (USDT) stablecoins.
The development of DeFi systems and smart contracts serves developers who work on international projects.

Bitcoin mining reached its peak in China before 2021 when the country generated more than 65% of the worldwide hash rate. The mining ban in China did not fully stop operations, as the country maintained approximately 20% of Bitcoin mining capacity in 2022.

Market Overview: Size, Tokens, and Players

Crypto activity originating from China continues to be massive despite official bans on cryptocurrency operations. Chinese users processed $86 billion worth of cryptocurrency transactions through blockchain technology from the middle of 2022 until the middle of 2023. During the first three quarters of 2024, OTC crypto trading desks in China processed more than ¥75 billion RMB, which equates to approximately $10 billion USD.

Notable Chinese-Origin Crypto Projects:

Binance (BNB) established its operations under the leadership of Changpeng Zhao (CZ).
Huobi (HTX) and OKX – originally Chinese exchanges
Bitmain – leading global mining equipment producer
VeChain, Conflux, Tron – Chinese-rooted blockchain ventures

Despite the ban, the Chinese crypto talent pool maintains its impact on worldwide innovation through exchange operations and blockchain startup activities, as well as developer work on international platforms.

Crypto Regulations: A Tightening Grip

China maintains official support for blockchain technology but it bans cryptocurrency operations through its current policy. The government supports blockchain implementation for business and governance yet completely prohibits private cryptocurrencies from trading activities and mining operations and exchange utilization.

Key Regulatory Milestones:

2013: Banks banned from handling Bitcoin
The government implemented a total ban on ICOs and domestic crypto exchange operations during 2017.
The government implemented a complete prohibition against all crypto transactions and mining operations during 2021.
The government plans to intensify its restrictions against OTC trades and mining operations and VPN usage throughout 2022–2024.

The Chinese government views crypto-related activities as illegal conduct because they pose dangers to capital movement along with fraud schemes, energy consumption and financial system instability.

Digital Yuan: China’s Legal Crypto Alternative

The Digital Yuan (e-CNY) operates as China's authorized digital currency despite being different from private cryptocurrencies. The Digital Yuan operates in more than 200 cities worldwide for various transactions.

Retail payments
Government subsidies
Festival giveaways (via “red envelopes”)
Integration with apps like WeChat Pay and Alipay

The digital yuan reached a transaction volume of 7 trillion yuan, equivalent to $1 trillion USD through mid-2024. The government supports digital currency as an official alternative to private cryptocurrencies because it plans to make it the dominant payment method in the future.

Crypto Exchanges: From Giants to Ghosts

Mainland China does not permit any legal operations of crypto exchanges within its borders. The 2017 and 2021 regulatory actions forced Binance, OKX and HTX to relocate their operations outside Chinese borders. Users currently access these platforms through the combination of Virtual Private Networks (VPNs), foreign IDs and peer-to-peer trading of yuan for USDT.

VPNs to bypass internet censorship
Users need to present foreign identification documents to fulfill KYC requirements.
Users conduct P2P trading operations that allow them to exchange yuan currency for USDT.

OTC markets continue their operations while facing growing regulatory constraints. The authorities track crypto-linked transactions through payment apps and bank monitoring activities until they detect suspicious accounts, which they freeze immediately.

Crypto Wallets: Self-Custody or Nothing

Chinese crypto users currently depend on non-custodial wallets because both exchanges and custodians are unavailable to them. The wallets provide users with private key storage capabilities and complete crypto management autonomy.

Popular Wallets in China:

The Chinese mobile wallet market consists of imToken, TokenPocket and MathWallet.
The Ethereum and DeFi blockchain ecosystem depends on MetaMask as its primary wallet solution.
Ledger, Trezor, OneKey – hardware wallets for cold storage
The globally popular multi-coin wallets include Trust Wallet and Exodus, together with Electrum.

The unregulated status of wallets enables many users to store their assets safely through their wallets. The exposure to wallet users includes the risk of encountering scams and phishing attempts, as well as technical vulnerabilities.

Crypto Taxation in China: A Legal Grey Zone

China does not impose taxes on crypto profits because it considers crypto transactions illegal instead of making them tax-free. Digital assets exist in a legal vacuum because China lacks both capital gains regulations and reporting requirements and an official tax system for these assets.

The discovery of crypto income leads to financial penalties for money laundering and illegal business activities instead of tax evasion charges.

The Chinese government used to tax mining operations as enterprise income until 2021 when it implemented a complete mining ban.

The tax system does not apply to NFTs/digital collectibles unless illegal profit occurs from their sale.

The Digital Yuan tracks its usage through monitoring systems yet operates as a standard form of fiat money.

Hong Kong allows crypto under licensing terms but the transfer of funds from Hong Kong to mainland China remains high risk because it violates currency regulations.

Crypto Education & Community in China

From 2015 through 2017, China experienced an active crypto community phase that reached its peak during that period. The Chinese crypto community thrived through events and forums and developer meetups, which included Ethereum's DevCon2 in Shanghai. The current operation of this community happens under lower visibility.

Current State:

All Weibo and WeChat accounts dealing with crypto information face automatic censorship by Chinese authorities.
Underground communities exist within Telegram and Discord groups
Overseas resources like Binance Academy, and Ethereum.org offer Chinese-language content
Users from China participate in events that take place in Hong Kong and Singapore, as well as in Dubai.
The suppression of Chinese developers and traders from mainland China has not stopped their global market activities.

The Future of Crypto in China

China shows no signs of changing its current position regarding cryptocurrency during the near future. The focus remains on:

Expanding the Digital Yuan
Developing enterprise blockchain tech
The country engages in worldwide CBDC cooperation through its involvement in Bridge projects.

The worldwide acceptance of cryptocurrencies might force China to reconsider its current stance toward digital assets. Experts anticipate that institutions will gain access to regulated crypto investments and financial products based on tokens and it will become available in the future. The crypto licensing structure in Hong Kong functions as a trial platform for potential upcoming changes in regulatory frameworks.

The legalization of private cryptocurrencies in China appears to be beyond the realm of present possibility.

FAQs: Cryptocurrency in China (2025)

1. The Chinese government prohibits the purchase or mining of Bitcoin but not the ownership of it.

The possession of Bitcoin is not considered illegal in China yet the purchase or sale of Bitcoin along with Bitcoin mining activities remain prohibited. Ownership offers no legal protections.

2. Are crypto exchanges permitted for use within Chinese territory?

Not legally. All major exchanges are blocked. Users who employ VPN services face dangerous situations while breaking Chinese regulatory laws.

3. What is the Digital Yuan?

The central bank digital currency (CBDC) of China exists as its digital version of the Renminbi. The digital RMB stands as a state-authorized digital version of the Chinese Renminbi currency.

4. The Chinese government does not impose taxation on profits obtained from cryptocurrency investments.

No formal crypto tax exists. The Chinese government prohibits crypto transactions, which means that earning profits from crypto could result in criminal prosecution instead of taxation.

5. Does mining activity continue to operate in China?

Officially banned since 2021. Underground mining continues but those who operate risk both detention and seizure of their equipment.

6. The Chinese authorities took action against both Huobi and Binance in their country.

They moved offshore after 2017. The platforms have discontinued operations for mainland China beginning in 2021.

7. How do people buy crypto now?

People conduct OTC brokerages and P2P trades using USDT as their primary method for cryptocurrency purchases. This activity remains illegal yet unofficial while exposing participants to potential legal consequences.

8. What about NFTs?

Digital collectibles known as NFTs maintain strict restrictions since they forbid cryptocurrency payments and forbid users from profiting from resales.

9. What kind of educational resources about crypto exist within the Chinese borders?

The majority of users depend on VPNs to connect with worldwide sites and join educational Telegram groups.

10. Will China unban crypto in the future?

Unlikely soon. There are indications that tokenized finance or regulated use could emerge in the future but China has not provided any official signals regarding these possibilities.