China’s digital asset policy has undergone a sweeping transformation. While the government has prioritized state-backed innovation through blockchain and the digital yuan, its stance on speculative cryptocurrency activities has grown markedly stricter. With new regulations implemented from 2025 onward, the entire digital asset ecosystem in China is being fundamentally reshaped.
Historic crackdown on crypto in China
The journey of cryptocurrencies in China has been controversial for over a decade. Between 2017 and 2020, China accounted for 60% to 75% of the global hashrate in Bitcoin mining, emerging as a central hub for the industry. However, starting in 2017, the government began tightening its grip with a series of bans on initial coin offerings (ICOs) and domestic exchange activities.
With the arrival of 2025, these measures have entered an entirely new phase. As of June 1, 2025, a sweeping policy came into effect that completely bans individuals from holding, trading, or mining cryptocurrencies. The digital yuan (e-CNY) is now the sole officially recognized currency.
The People’s Bank of China has framed the ban as a way to promote financial stability, reduce systemic risks, and strengthen national security. Officials emphasized the new framework closes loopholes from earlier restrictions and applies to both individual and commercial crypto activity.
Officials argue that virtual currency transactions undermine financial stability and disrupt China’s financial order.
Offshore stablecoins and new laws
Despite the harsh bans, China continues to invest heavily in blockchain technology. After a call from President Xi in 2019 to embrace blockchain, the technology expanded across numerous sectors from government services to finance. Legislative reforms, including new cryptography laws and the incorporation of virtual asset inheritance into civil law, have followed suit.
Nevertheless, new restrictions targeting offshore stablecoins, particularly those pegged to the yuan, stand out. Under the latest rules, no private or foreign company can issue a stablecoin linked to Chinese assets or the yuan without direct government authorization. Authorities stress that, because stablecoins function as a form of money, they must be subject to strict regulation.
These measures could significantly undermine Hong Kong’s ambitions to become a regional crypto hub. Beijing’s position signals that stablecoins tied to the yuan, if not issued under state control, will not be accepted.
Legal status and blockchain innovation
China encourages blockchain innovation only in tightly regulated, state-approved domains. Initiatives like the Blockchain-based Service Network (BSN) are exploring tokenization of real-world assets through official infrastructure. However, individual crypto ownership remains in a legal gray area, with courts usually refraining from criminal penalties against holders, though disputes involving such assets may lack legal protection.
Regulators have also banned banks, payment institutions, and financial service providers from offering crypto-related services. Advanced artificial intelligence tools now monitor financial transactions, flagging suspicious crypto activity. Practical measures such as account freezes have further increased the risks of investing in cryptocurrencies.
Authorities have reiterated that only state-backed digital currencies will be recognized as legal, and that decentralized cryptocurrencies will not serve as official payment methods in China.
China’s primary objective is to consolidate monetary sovereignty through the digital yuan and reduce dependence on the US dollar in global finance. The government’s restrictive approach to the crypto sector is closely linked to its aim of channeling blockchain innovation under strict state control. Notably, the People’s Bank of China pioneered one of the world’s first state-backed digital currency projects.
