China has implemented its most comprehensive cryptocurrency ban to date. The measure extends beyond previous restrictions on trading and mining to prohibit personal ownership of digital assets.
Full Ownership Ban Takes Effect
The People’s Bank of China announced on 30 May 2025 that personal ownership of cryptocurrencies is now criminalised. The ban covers Bitcoin, Ethereum and all other digital currencies. This represents a significant escalation from the 2021 regulations that targeted trading and mining operations.
Chinese authorities justified the measure as necessary to strengthen financial control and accelerate digital yuan adoption. The ban aims to eliminate all cryptocurrency activity within China’s borders.
*CHINA HAS OFFICIALLY BANNED CRYPTOCURRENCY TRADING, MINING, AND RELATED SERVICES, CITING FINANCIAL RISKS, CAPITAL FLIGHT CONCERNS, AND ENVIRONMENTAL IMPACTS
🇨🇳🇨🇳 pic.twitter.com/lDvO7mh77Z
— Investing.com (@Investingcom) August 3, 2025
Legal Framework Strengthened
New foreign exchange regulations require banks to monitor and report cryptocurrency transactions. The State Administration of Foreign Exchange mandates that financial institutions track suspicious activities based on identity verification, funding sources and transaction frequency.
Banks must implement risk control measures and restrict services to entities engaged in cryptocurrency activities. These regulations create additional legal foundations for prosecuting cryptocurrency trading.
Market Impact and Global Response
Bitcoin prices dropped sharply following the announcement. The cryptocurrency fell from $107,000 to just above $105,000. Alternative cryptocurrencies experienced greater volatility, with Solana declining 5.7% and Cardano falling 6.1%.
Global cryptocurrency markets reacted with immediate volatility. However, analysts suggest the downturn may be temporary as regulatory-driven corrections often reverse quickly.
Cardano falls around 6.1%
Digital Yuan Advancement
The ban coincides with China’s push to expand digital yuan usage globally. The People’s Bank of China established an international operations centre in Shanghai to promote the e-CNY worldwide. Officials seek to create a multipolar currency system that reduces dependence on the US dollar.
The digital yuan has processed 7 trillion yuan in transactions across 26 cities by June 2024. The central bank digital currency serves as China’s preferred alternative to decentralised cryptocurrencies.
China pushes to expand the digital Yuan usage globally
Underground Activity Persists
Despite comprehensive restrictions, underground cryptocurrency trading continues through offshore exchanges and peer-to-peer networks. Investors use VPN technology and foreign bank accounts to circumvent the ban. Underground crypto flows reached over $75 billion in the year leading to mid-2024.
Chinese courts continue to recognise cryptocurrency as property for legal purposes. This creates a complex environment where ownership remains technically recognised while commercial activity faces prosecution.
Regional Variations
Hong Kong maintains a different approach with its regulated cryptocurrency framework. The special administrative region continues approving exchange licences and allows retail trading services. This divergence reflects broader regional variations in China’s cryptocurrency policy.
The mainland restrictions do not extend to Hong Kong’s operations. Licensed exchanges in the territory continue serving clients under established regulatory guidelines.
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Enforcement Mechanisms
Authorities have strengthened enforcement through banking sector oversight. Financial institutions must report foreign exchange transactions involving cryptocurrencies to regulators. The system enables real-time monitoring of suspicious activities.
The government has seized billions of yuan worth of cryptocurrency through criminal investigations. These holdings present challenges for disposal procedures and transparency requirements.
International Implications
China’s expanded ban reinforces its position as one of 51 jurisdictions with cryptocurrency restrictions. The measure contrasts with increasing global acceptance of digital assets in other regions.
The policy strengthens China’s commitment to state-controlled financial systems. Officials view cryptocurrencies as threats to monetary sovereignty and financial stability.
Future Outlook
Despite comprehensive restrictions, policy discussions continue regarding yuan-pegged stablecoins. Shanghai regulators have held roundtables exploring digital currency innovation within central bank digital currency frameworks.
The ban represents China’s most restrictive cryptocurrency stance while advancing state-sanctioned digital systems. The approach serves as a case study for government control over decentralised digital assets.
Compliance Requirements
Banks across mainland China must implement new monitoring systems for cryptocurrency-related transactions. Financial institutions face requirements to assess client activities and restrict services to high-risk entities.
The regulations complicate cross-border transactions involving digital assets. Fintech companies must navigate stricter compliance requirements or seek operations in more favourable jurisdictions.
