Digital asset policy in China has undergone a radical change. While the country has recently highlighted state-supported innovations such as blockchain and digital yuan, it has also hardened its attitude towards speculative cryptocurrency activities. In particular, the regulations introduced as of 2025 are reshaping the digital asset ecosystem in China.
Historic ban on crypto in China
The journey of cryptocurrencies in China has been controversial for more than a decade. China, which had 60-75 percent of the global hashrate in Bitcoin mining between 2017-2020, became the center of the industry in the first years. Starting from 2017, the government began to tighten control by increasing bans on initial coin offerings (ICO) and domestic stock exchange activities.
By 2025, China’s measures against crypto have moved to a completely new dimension. With the comprehensive regulation that came into effect on June 1, 2025, individual holding, trading and mining of cryptocurrencies was completely prohibited in the country. Only the digital yuan (e-CNY) was recognized as the official currency.
With this ban, the People’s Bank of China highlighted the aims of ensuring financial stability, reducing systemic risks and strengthening national security. Authorities announced that the new framework covers both individual and commercial crypto activities, and that some of the loopholes in the previous restrictions have been closed.
Authorities argued that virtual currency transactions threatened financial stability and disrupted the country’s financial order.
Offshore stablecoin and new regulatory steps
Despite strict bans, China continues to invest in blockchain technology. After the President openly called for promoting blockchain technology in 2019, blockchain began to be used in many areas, from government services to the financial sector. New encryption (cryptography) laws and the inclusion of the right to inherit virtual assets into the Civil Code were also part of this process.
Still, the restrictions imposed on foreign-based yuan-fixed (offshore RMB stablecoin) projects are particularly noteworthy. According to the latest regulations, any private or foreign company must obtain direct authorization before issuing stablecoins pegged to local assets or yuan in China. Authorities emphasized that stablecoins must be under strict supervision because they have a monetary function.
These measures could also seriously harm Hong Kong’s ambitions to become a regional crypto hub. Beijing’s latest stance indicates that RMB-pegged stablecoins issued outside state control will not be accepted.
Legal status and blockchain innovation
China continues to encourage blockchain innovations only in government-approved, controlled areas. While the tokenization of real-world assets through official infrastructures such as Blockchain Based Service Network (BSN) is on the agenda, individual cryptocurrency ownership appears to remain in a legal gray area. Although the courts do not impose criminal penalties on individuals simply for holding crypto assets, it is stated that contracts may be deprived of legal protection in disputes regarding these assets.
Regulators; It also banned banks, payment institutions and financial services providers from offering crypto-related services. In addition, with artificial intelligence-based financial surveillance technologies, crypto buy-sell transactions and suspicious money transfers began to be detected; Practices such as bank account freezing are used, which actually make crypto investment riskier.
Authorities reiterated that decentralized crypto assets will not be official means of payment in the country, emphasizing that only state-backed digital money systems will be legally accepted.
China’s main focus is to increase monetary sovereignty with the digital yuan project and reduce dependence on the dollar in the international financial system. The restriction policy towards the crypto sector is based on the goal of keeping blockchain innovation under state control. The Central Bank of China also has the title of being the institution that implemented one of the world’s first state-supported digital money projects.
