Legal Status of Cryptocurrencies in China: Complete Ban and Enforcement in 2026

As of 2026, owning or trading cryptocurrency in China is illegal. Not just discouraged - not just restricted - but outright banned. This isn't a gray area. It's a hard stop. If you're in China, holding Bitcoin, Ethereum, or any other digital token is legally risky. And if you're running a business that touches crypto in any way, you're breaking the law.

How China Went From Crypto Enthusiast to Crypto Ban

Just a few years ago, China was one of the biggest players in the global crypto scene. It hosted the majority of Bitcoin mining operations. Chinese investors dominated trading volumes. Exchanges like Huobi and OKX were household names. But that changed fast.

In 2017, the People's Bank of China shut down initial coin offerings (ICOs). Then in 2021, it banned all cryptocurrency transactions and forced exchanges to leave the mainland. But even that wasn't enough. On June 1, 2025, China took the final step: a total ban on all crypto-related activity under Circular No.237. This law didn't just stop exchanges - it made it illegal to even hold crypto as a private individual.

The government didn't flip a switch. It built a wall, brick by brick. First, it cut off banks from handling crypto. Then it shut down mining farms. Then it blocked websites and apps. Finally, it declared any crypto transaction void under Chinese law. No contracts. No protections. No recourse.

What Exactly Is Banned?

The 2025 ban covers everything:

• Buying, selling, or trading any cryptocurrency - even peer-to-peer
• Mining Bitcoin or other coins - all hardware must be shut down
• Holding crypto in personal wallets - no legal recognition
• Providing exchange services, pricing tools, or wallet apps
• Marketing crypto to Chinese residents - even from overseas
• Using crypto to pay for goods or services
• Participating in decentralized finance (DeFi) platforms

Even if you're a foreigner visiting China, you're subject to these rules. If you're caught trading crypto while in Beijing or Shanghai, you can be fined, have assets seized, or face criminal charges if authorities believe you're involved in financial fraud.

What Happens If You Get Caught?

There are no warnings. No first-time leniency. The penalties are severe and consistent.

• Any crypto you own can be confiscated by authorities - no appeal
• Bank accounts linked to crypto activity may be frozen
• Using crypto to transfer money can be treated as money laundering
• Operating a crypto-related business can lead to criminal prosecution
• Chinese courts refuse to hear cases about lost crypto - you're on your own

In 2022, a court in Hangzhou dismissed a lawsuit from an investor who lost $500,000 in a crypto scam. The judge ruled: "Since cryptocurrency transactions are illegal in China, the law does not protect such claims." That precedent still stands in 2026.

Crypto Mining? Completely Shut Down

China used to be home to 70% of the world's Bitcoin mining. That ended in 2021. By 2025, every mining facility - from massive data centers in Inner Mongolia to hidden warehouses in Sichuan - was shut down. The government cited two reasons: energy waste and financial instability.

Power grids in provinces like Xinjiang and Inner Mongolia were being strained by mining rigs running 24/7. At the same time, regulators saw crypto as a threat to financial control. So they turned off the lights. Thousands of miners fled to Kazakhstan, the U.S., and other countries. Today, there are zero legal mining operations left in mainland China.

Blockchain Is Fine - Just Not Crypto

Here's the twist: China loves blockchain - as long as it's controlled by the state.

While private cryptocurrencies are banned, the government is investing billions into blockchain technology. The State Council promotes blockchain for supply chain tracking, land registries, and tax collection. The key difference? China's blockchain is centralized. It's not decentralized. It's not anonymous. It's not open.

The government calls this "blockchain for governance." It's a tool to increase transparency - but only on their terms. Private crypto? That's "financial chaos." State-controlled blockchain? That's "innovation."

The Digital Yuan Is the Real Alternative

China isn't just banning crypto - it's replacing it.

The digital yuan, or e-CNY, is the centerpiece of China's financial future. Launched in 2020, it's now used in over 200 cities. People use it to pay for groceries, subway rides, and utility bills. The government pushes it hard - through mobile apps, subsidies, and even mandatory payroll integration in some state-owned companies.

Unlike Bitcoin, the digital yuan is fully traceable. The central bank knows who you paid, how much, and when. There's no anonymity. No decentralization. No risk to state control.

The message is clear: If you want digital money in China, it has to be ours.

What About Hong Kong?

Hong Kong is the exception that proves the rule.

While mainland China bans crypto, Hong Kong - as a separate customs and financial zone - passed the Stablecoin Bill in May 2025. It now licenses stablecoin issuers, allows regulated trading, and permits institutional crypto investment.

This isn't a loophole. It's a deliberate policy split. Hong Kong serves as China's financial bridge to global markets - but only under strict oversight. The mainland doesn't recognize Hong Kong's crypto rules. If you're a mainland resident trading on a Hong Kong exchange, you're still breaking Chinese law.

Can You Work Around the Ban?

Some try. Some use VPNs to access foreign exchanges. Some store crypto in offshore wallets. Some use peer-to-peer cash trades.

But here's the reality: it doesn't work.

Chinese regulators have tools to detect crypto activity. They monitor bank transfers. They track domain names. They scan social media for crypto ads. They pressure internet service providers to block access. Even if you're not in China, if you're marketing crypto to Chinese users - even through a website - you're at risk of being blacklisted or fined.

There's no legal way to operate a crypto business targeting China. No licenses exist. No exceptions. No gray zone.

Why Does China Care So Much?

It's not about technology. It's about control.

The Chinese government fears losing financial power. Cryptocurrencies bypass the banking system. They let people move money without oversight. They enable capital flight. They undermine the yuan's dominance.

By banning crypto, China:

• Keeps money flowing through state-controlled banks
• Prevents citizens from moving wealth offshore
• Eliminates competition to the digital yuan
• Reduces risks of fraud and money laundering
• Reinforces the state's monopoly on financial infrastructure

This isn't about being anti-innovation. It's about being pro-control. China wants digital money - but only if it can track every transaction.

What’s Next?

Don’t expect a reversal. The ban is now baked into law. The penalties are enforced. The infrastructure is built. The digital yuan is expanding.

In 2026, China is the most restrictive country in the world when it comes to cryptocurrency. There are no signs of change. No political movement to legalize crypto. No court decisions to overturn the ban.

The only path forward is the digital yuan - and China is pushing it hard.