May, 12 2025
Key Takeaways
- Effective June 1 2025 China prohibits any crypto‑exchange activity for residents, including trading, mining and ownership.
- The ban stems from PBOC Circular No.237, which labels all crypto‑related services as illegal financial activities.
- Compliance is enforced through banks, payment platforms, telecom monitoring and coordinated police crackdowns.
- Chinese citizens face severe penalties for using VPNs or offshore services to bypass the ban.
- Hong Kong remains the nearest regulated hub, but it cannot legally serve mainland users.
China’s cryptocurrency crackdown reached its zenith on June 1 2025 when the People’s Bank of China (PBOC) issued a sweeping prohibition that bars citizens from any crypto‑exchange activity. The move, codified in Circular No.237, not only shuts down domestic platforms but also forces foreign exchanges to block Chinese users. Below is a plain‑English run‑through of what the ban means, how it is policed, and what options (if any) remain for a typical Chinese resident.
What the Ban Actually Says
China's cryptocurrency exchange ban is a regulatory decree that classifies every cryptocurrency‑related business activity as an illegal financial transaction. The decree, formally known as Circular No.237, covers:
- Trading of any digital token (Bitcoin, Ethereum, stablecoins, etc.)
- Providing pricing or intermediary services for crypto transactions
- Exchanging legal tender for crypto and vice‑versa
- Operating as a central counter‑party for crypto buy‑sell orders
- Token‑issuance financing and fundraising activities
Anyone caught holding or moving crypto assets can be prosecuted for “illegal financial activity,” with fines up to several hundred thousand yuan and possible detention.
How Enforcement Works on the Ground
The ban is backed by a multi‑layered enforcement apparatus:
- Bank and payment‑platform monitoring: Major banks and fintech firms like Alipay must block crypto‑related transactions and flag suspicious transfers.
- Telecom surveillance: Internet service providers are required to identify VPN traffic that attempts to reach offshore exchanges.
- Police‑regulator joint raids: Since July 2025 coordinated crackdowns have targeted Tether (USDT) transfer schemes used for cross‑border capital flight.
- Automated transaction‑analysis: Financial institutions run AI‑driven models that detect abnormal patterns typical of crypto dealings.
These measures have forced more than ten exchanges to withdraw from the mainland within a month of the circular’s publication.
Timeline: From Early Warnings to Full Prohibition
China’s stance has evolved over a decade:
| Year | Regulatory action |
|---|---|
| 2013 | Dec‑2013 notice warning of Bitcoin risks; banks barred from Bitcoin services. |
| 2014 | April: closure of Bitcoin trading accounts. |
| 2017 | Sept: ICOs declared illegal; 24 platforms shut down. |
| 2018 | Jan: miners forced offshore. |
| 2021 | June: mining ban citing energy concerns; Sept: effective ban on all token trading. |
| 2025 | June 1: comprehensive ban on trading, mining, ownership (Circular No.237). |
Each step tightened capital controls and cleared the way for the state‑backed digital yuan.
Impact on Everyday Users
For ordinary citizens, the practical effects are stark:
- Closed on‑ramps: No bank cards or mobile wallets can be linked to crypto exchanges.
- Blocked offshore access: VPN usage is monitored; many foreign exchanges have voluntarily blocked Chinese IPs.
- Legal risk: Even a small amount of Bitcoin stored on a foreign wallet can trigger an investigation.
- Alternative assets: Some turn to precious metals or the digital yuan, which the PBOC promotes as a safe, regulated alternative.
Companies operating in China are also barred from holding crypto on their balance sheets. The only legal exposure comes via offshore subsidiaries or Hong Kong‑listed products, which themselves cannot market directly to mainland residents.
Workarounds - Why They’re Risky
Despite the crackdown, a few users still try to access crypto:
- VPNs and proxy services: Provide temporary access but are increasingly detectable.
- Peer‑to‑peer OTC brokers: Operate in legal grey zones; often linked to fraud rings targeted by July 2025 police sweeps.
- Foreign‑registered entities: Some set up entities in Hong Kong or Singapore to trade on their behalf, but Chinese authorities consider this “illegal capital outflow.”
All three carry heavy penalties and can result in frozen assets, fines, or even criminal charges.
Where China Stands Compared to Its Neighbors
Hong Kong, by contrast, has created a licensed crypto‑exchange framework and is positioning itself as a regional hub for tokenisation and Web‑3. Singapore and Japan also maintain clear, supportive regulatory sandboxes. For Chinese citizens, the only legal path to digital assets is through these jurisdictions, but direct marketing to mainland users is prohibited, forcing them to rely on friends or family abroad.
Future Outlook: Digital Yuan vs. Decentralized Crypto
The government frames the ban as a step toward broader adoption of the digital yuan, the Central Bank Digital Currency (CBDC). Pilot projects in Shanghai and Shenzhen are expanding, and the PBOC has repeatedly said financial stability and capital control are top priorities.
Experts predict that until the digital yuan reaches mass adoption, the risk of illicit cross‑border crypto use will keep the enforcement apparatus aggressive. No sign of reversal is evident, and any softening would likely be limited to specific use‑cases such as “regulated tokenised assets” under a strict licensing regime.
Quick Checklist for Chinese Residents
- Do NOT attempt to open a crypto‑exchange account using a Chinese ID.
- Avoid VPN services that claim “crypto‑friendly” access.
- If you already hold crypto abroad, consider moving it to a trusted jurisdiction with strong legal protection.
- Stay updated on digital‑yuan pilot news for legitimate digital‑payment options.
- Consult a qualified legal advisor before any cross‑border crypto activity.
Frequently Asked Questions
Is it illegal for Chinese citizens to own Bitcoin?
Yes. Since the June 2025 ban, owning, buying, selling or even storing Bitcoin for personal use is classified as an illegal financial activity under Circular No.237.
Can I use a VPN to access a foreign exchange?
Technically a VPN can mask your IP, but regulators monitor VPN traffic and many exchanges have blocked Chinese users. Getting caught can lead to fines and possible detention.
What happens to Chinese miners?
Mining operations were forced offshore after the 2021 environmental ban. Domestic mining equipment is now either repurposed or scrapped, and any new mining activity would be illegal.
Is the digital yuan a crypto alternative?
The digital yuan is a state‑issued CBDC, fully regulated and tied to the Chinese legal tender. It is not decentralized and does not have the same market‑driven price dynamics as Bitcoin or Ethereum.
Can Chinese companies invest in crypto abroad?
Direct investment is prohibited. Companies may only gain exposure through offshore subsidiaries that comply with foreign regulations, and even then they cannot market those products to mainland residents.
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