Legal Status of Cryptocurrencies in China: Complete Ban and Enforcement in 2025

As of June 1, 2025, owning, trading, or mining any cryptocurrency in China is illegal. This isn’t a gray area. It’s a full ban - no exceptions, no loopholes. If you’re in China, holding Bitcoin, Ethereum, or even a stablecoin like USDT could put you at legal risk. The government doesn’t just discourage it - it actively shuts down access, freezes assets, and prosecutes those who try to bypass the rules.

What’s Actually Illegal Now?

The 2025 ban isn’t just about exchanges. It covers everything. You can’t buy Bitcoin on a local app. You can’t mine it using your home GPU. You can’t even accept crypto as payment for goods or services. The People’s Bank of China and other agencies made it clear: any activity tied to private digital currencies is classified as an illegal financial activity under Circular No. 237. That includes:

• Trading crypto on domestic or offshore platforms targeting Chinese users
• Mining cryptocurrency using electricity or hardware in China
• Providing wallet services, price data, or trading advice for crypto
• Exchanging yuan for Bitcoin or vice versa
• Running ICOs or token sales
• Marketing crypto to Chinese citizens, even from overseas

Even if you bought crypto before the ban, you’re not protected. The government considers any gains from crypto as illicit proceeds. If you’re caught with large holdings, authorities can seize them. Courts have consistently ruled that crypto-related contracts are void - meaning if someone scams you with a fake crypto investment, you have no legal recourse. The system doesn’t recognize your claim because the underlying transaction was illegal from the start.

What About Mining?

China used to be the world’s top mining hub. In 2021, it controlled over 60% of Bitcoin’s hash rate. That changed fast. Starting in 2021, provinces like Sichuan and Inner Mongolia shut down mining farms. By 2025, every last operation was gone. The government didn’t just crack down - it eliminated the infrastructure. Power companies were ordered to cut electricity to mining rigs. Local governments were fined if they allowed mining to continue. Today, there are no legal mining farms in mainland China. Even running a single ASIC miner at home is risky. Authorities use energy usage analytics to spot unusual spikes - and they follow up.

Why Did China Do This?

It wasn’t just about money laundering or fraud - though those were cited. The real reason is control. The Chinese government sees decentralized crypto as a threat to its financial sovereignty. If people can move money outside the system, bypass the yuan, and avoid surveillance, it undermines the state’s ability to manage the economy. That’s why they pushed so hard to kill it.

At the same time, they’re building something else: the digital yuan, or e-CNY. This isn’t crypto. It’s a state-controlled digital currency. Every transaction is tracked. Every wallet is linked to your ID. The government isn’t banning digital money - it’s banning decentralized money. They want digital payments, but only on their terms. You can use e-CNY to pay for groceries, ride a bus, or send money to a friend. But you can’t trade it, speculate on it, or hold it as an investment. It’s a tool for control, not freedom.

What Happens If You Get Caught?

Penalties vary. For most individuals, it starts with warnings and account freezes. Banks and payment apps like Alipay and WeChat Pay now scan transactions for crypto-related keywords. If you try to send money to a crypto exchange, the transaction gets blocked. If you repeatedly try, you could be flagged for “illegal financial activity.”

For businesses or repeat offenders, the consequences are harsher. Fines can reach millions of yuan. Executives of crypto platforms that operated in China have been sentenced to prison for “illegal fundraising.” Foreigners aren’t exempt. Tourists, expats, or business travelers who hold crypto wallets on their phones have had devices searched at airports. Assets were confiscated. Some were fined on the spot.

There’s no formal “crypto jail” - but you can be charged under broader laws like financial fraud, illegal business operations, or money laundering. The legal system doesn’t need a specific crypto law to punish you. It uses existing tools.

What About Blockchain?

Here’s where it gets confusing. China still promotes blockchain. Universities teach it. State-owned banks use it for supply chain tracking. The Shanghai Data Exchange even launched a data asset-backed financing instrument in late 2024. So why the contradiction?

The government draws a hard line: blockchain = good. Cryptocurrency = bad. They see blockchain as a tool for efficiency, transparency, and control. Crypto, on the other hand, is anonymous, unpredictable, and decentralized - everything the state wants to eliminate. So while you can legally build a blockchain-based logistics system, you can’t use Bitcoin to pay for it.

What About Hong Kong?

Hong Kong is different. It operates under its own legal system. In May 2025, Hong Kong passed the Stablecoin Bill, creating a licensing framework for stablecoin issuers. Companies like Circle and Tether are now allowed to operate under strict rules. This isn’t a loophole for mainland China - it’s a separate jurisdiction. If you’re in Shanghai, you can’t use Hong Kong-based services. If you’re in Hong Kong, you can. But if you’re a Chinese citizen living on the mainland and you try to access a Hong Kong crypto exchange, you’re still breaking the law.

Can You Still Use Crypto in China?

Technically, yes - but not safely. Some people still hold crypto in cold wallets or use peer-to-peer platforms. But it’s like driving without a license. You might not get caught today, but if you’re flagged - for a large transaction, a suspicious bank transfer, or even a social media post - you’re at risk. There’s no legal protection. No recourse. No insurance. If your wallet gets hacked, you lose everything. If the government finds it, they take it.

Even offshore exchanges that claim to serve Chinese users are now blocked. VPNs that bypass restrictions are monitored. The government’s tech teams actively detect and shut down access points. The barrier isn’t just legal - it’s technical.

What’s the Future?

Don’t expect the ban to lift anytime soon. The government has invested billions into the digital yuan. Over 600 million people now use e-CNY in pilot programs across cities like Beijing, Shanghai, and Shenzhen. The infrastructure is built. The habits are forming. Reversing course would mean admitting a major policy failure - and giving up control.

The next phase is global. China is pushing its digital currency in Belt and Road countries, offering e-CNY as a settlement tool for trade. They’re not trying to win the crypto race. They’re trying to bypass it entirely.

What Should You Do?

If you’re in China: avoid crypto. Don’t buy it. Don’t mine it. Don’t hold it. Use the digital yuan if you need digital payments. It’s legal, safe, and widely accepted.

If you’re outside China and doing business with Chinese entities: don’t offer crypto services. Don’t market to Chinese users. Even if your company is based in Singapore or the U.S., promoting crypto to people in China violates Chinese law - and you could be barred from doing business there entirely.

If you’re a traveler: don’t bring crypto hardware wallets into China. Don’t try to access exchanges. Customs officials have been instructed to look for them. Better to leave it at home.

Final Thought

China didn’t just regulate crypto - it erased it. From the world’s biggest crypto market to the strictest ban in history, the shift was fast, brutal, and intentional. This isn’t about technology. It’s about power. The state wants to own your money, track your spending, and control your financial choices. Crypto offered an escape. China chose to close the door - and lock it.