China

## Report on Retail Cryptocurrency Trading Status in China

**Date of Report:** 2025-06-26

**Topic:** Retail_Trading_Status

**Description:** Assess whether individual citizens and residents in the country are legally permitted to buy, sell, and hold cryptocurrencies. Detail the regulatory environment surrounding this activity (e.g., KYC/AML requirements imposed on platforms, general warnings issued).

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### Retail_Trading_Status: China

**Identified Status:** Banned

**Detailed Narrative Explanation:**

China has adopted a stringent and comprehensive ban on all cryptocurrency-related activities for individual citizens and residents. This includes the buying, selling, and holding of cryptocurrencies, as well as any services facilitating such transactions. The regulatory stance has evolved over several years, culminating in a series of decisive pronouncements and enforcement actions that leave no ambiguity regarding the illegality of retail cryptocurrency trading and ownership.

**Historical Context and Regulatory Evolution:**

China was once a dominant force in the global cryptocurrency market, particularly in Bitcoin trading and mining. However, concerns over financial stability, capital flight, money laundering, and the potential for cryptocurrencies to undermine the state's control over the financial system led to a progressive tightening of regulations.

Key milestones in this regulatory crackdown include:

*   **2013:** The People's Bank of China (PBOC) and other regulators issued a notice defining Bitcoin as a virtual commodity, not a currency, and prohibited financial institutions from dealing in it.
*   **2017:** China banned Initial Coin Offerings (ICOs) and ordered domestic cryptocurrency exchanges to cease operations. This move significantly impacted the global crypto landscape, forcing many exchanges to relocate overseas.
*   **2019:** Trading cryptocurrency was officially banned, with the PBOC stating it would block access to all domestic and foreign cryptocurrency exchanges and ICO websites.
*   **May 2021:** Three state-backed financial associations issued a warning against cryptocurrency-related financial activities, reiterating that financial institutions and payment companies should not provide crypto-related services.
*   **June 2021:** Authorities intensified a crackdown on cryptocurrency mining, citing concerns over energy consumption and financial risks. This led to a significant exodus of mining operations from the country.
*   **September 2021:** This marked a pivotal moment. The PBOC, along with nine other government authorities including the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security, issued the "Circular on Further Preventing and Disposing of Speculative Risks in Virtual Currency Trading" (PBOC Circular). This circular declared all cryptocurrency-related transactions illegal financial activities. This included cryptocurrency conversion, buying and selling, providing matching services, ICOs, and derivative transactions. Crucially, it also stated that overseas cryptocurrency exchanges providing services to Chinese residents via the internet are considered illegal financial activities. The circular warned that individuals investing in cryptocurrencies and related derivatives, where such activities violate public order and good customs, would find relevant civil legal actions invalid, and losses would be borne by the individuals themselves.
*   **Recent Developments (late 2024 - mid-2025):** Reports emerged indicating a further tightening of controls, with some sources suggesting an explicit ban on the *personal ownership* of cryptocurrencies, expanding on previous prohibitions on trading and mining. These reports, often citing Binance or other crypto industry sources, suggest that as of early to mid-2025, China has moved to outlaw even individual holdings of digital assets. The stated aims include strengthening control over national financial flows and promoting the adoption of China's official digital currency, the digital yuan (e-CNY). New regulations announced around December 31, 2024, reportedly targeted cross-border cryptocurrency transactions, requiring banks to identify and block such activities.

**Current Regulatory Environment:**

As of June 2025, all cryptocurrency trading, including buying, selling, and holding by individuals, is considered illegal in mainland China. Financial institutions and payment companies are strictly prohibited from offering any services related to cryptocurrencies. This includes opening accounts, facilitating fund transfers, or clearing and settlement for crypto transactions.

The government has established a multi-departmental working mechanism to monitor and crack down on cryptocurrency-related activities, including online and offline activities, and to severely address criminal offenses such as money laundering and cross-border gambling involving cryptocurrencies.

**Contradictory Signals and Clarifications:**

Despite the overarching ban, there have been some nuanced interpretations and isolated court rulings. For instance, some court cases have recognized cryptocurrencies as virtual property, offering a degree of protection for individual *possession* in specific dispute scenarios, though not legitimizing trading or other banned activities. A Shanghai court ruling in November 2024 reportedly classified Bitcoin and other cryptocurrencies as virtual commodities, granting them legal status as property for individual ownership, while reiterating that business activities like trading and mining remain strictly prohibited.

However, more recent and broader governmental pronouncements and reports from early to mid-2025 suggest a move towards a comprehensive ban that includes even personal ownership, effectively superseding or clarifying these earlier, more limited interpretations. The overarching regulatory intent remains to eliminate cryptocurrency speculation and associated financial risks within China.

**AML/KYC:**

Given the blanket ban on cryptocurrency transactions, specific AML/KYC regulations for cryptocurrency platforms operating within mainland China are largely moot, as such platforms are illegal. However, China has been strengthening its general Anti-Money Laundering (AML) framework, and there are discussions about explicitly including virtual assets in revised AML laws to address risks from illicit activities that might still occur despite the ban, often through overseas channels. The focus is on preventing money laundering through any means, including cryptocurrencies, even if their trading is already prohibited.

**Official Stance and Rationale:**

The Chinese government's rationale for the ban centers on several key concerns:
*   **Financial Stability:** Cryptocurrencies are viewed as speculative and volatile, posing risks to the financial system.
*   **Investor Protection:** Authorities aim to protect citizens from losses associated with speculative crypto trading.
*   **Preventing Illegal Activities:** Cryptocurrencies are seen as tools for money laundering, illegal fundraising, fraud, pyramid schemes, and cross-border gambling.
*   **Capital Controls:** The ban helps prevent capital flight and maintain control over cross-border financial flows.
*   **Promoting Digital Yuan (e-CNY):** The crackdown on private cryptocurrencies aligns with efforts to promote China's Central Bank Digital Currency (CBDC), the e-CNY, which offers centralized control.

**Conclusion:**

Retail cryptocurrency trading (buying, selling, and holding) is unequivocally banned in China for individual citizens and residents. The regulatory framework is comprehensive and enforced by multiple government bodies. While isolated court opinions have acknowledged cryptocurrencies as virtual property in specific contexts, these do not override the broad prohibitions on all crypto-related transactions and, more recently, potentially even personal ownership. The government's stance is driven by concerns over financial stability, illegal activities, and the desire to maintain control over its financial system, including through the promotion of its own digital currency.

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**Specific Relevant Text Excerpts and Sources:**

1.  **Status:** Banned
    *   **Excerpt:** "The People's Bank of China (PBOC), China's central bank, issued a regulatory document to control the “speculative risks of cryptocurrency trading”... The new PBOC circular declares all cryptocurrency transactions illegal."
    *   **Source:** Law Library of Congress, "China: Central Bank Issues New Regulatory Document on Cryptocurrency Trading," October 13, 2021.
    *   **URL:** [https://www.loc.gov/item/global-legal-monitor/2021-10-13/china-central-bank-issues-new-regulatory-document-on-cryptocurrency-trading/](https://www.loc.gov/item/global-legal-monitor/2021-10-13/china-central-bank-issues-new-regulatory-document-on-cryptocurrency-trading/)

2.  **Status:** Banned (including ownership as per recent reports)
    *   **Excerpt:** "The Chinese government has issued a sweeping ban on cryptocurrency assets. In addition to previous prohibitions on trading and mining activities, China has now officially outlawed private ownership of digital currencies such as Bitcoin. This latest move was reported by global crypto exchange Binance and is seen as a significant escalation of China's stringent policies toward the digital asset industry."
    *   **Source:** IDNFinancials, "China tightens financial control, crypto now fully banned," June 3, 2025.
    *   **URL:** [https://www.idnfinancials.com/news/49900/china-tightens-financial-control-crypto-fully-banned](https://www.idnfinancials.com/news/49900/china-tightens-financial-control-crypto-fully-banned) (Note: The URL provided in the search result leads to a redirect, the original source is IDNFinancials as cited)

3.  **Status:** Banned (including ownership as per recent reports)
    *   **Excerpt:** "On May 30, 2025, China introduced a new nationwide ban prohibiting the personal ownership of cryptocurrencies, including Bitcoin, according to a report by Binance. The updated policy expands earlier restrictions on crypto trading and mining, now outlawing even individual holdings of digital assets."
    *   **Source:** Coin Edition (via Binance Square), "China Bans Holding of Bitcoin and All Cryptocurrencies, Report Says," May 30, 2025.
    *   **URL:** [https://www.binance.com/en/feed/post/2025-05-30-china-bans-holding-of-bitcoin-and-all-cryptocurrencies-report-says-coinedition-3596950854670](https://www.binance.com/en/feed/post/2025-05-30-china-bans-holding-of-bitcoin-and-all-cryptocurrencies-report-says-coinedition-3596950854670)

4.  **Status:** Banned (Comprehensive Ownership Ban effective June 1, 2025)
    *   **Excerpt:** "May 30, 2025- Comprehensive Ownership Ban. The People's Bank of China (PBOC) issued a ban on all crypto activities, including trading, mining, and individual ownership. The crypto ban decree became effective from June 1, 2025, states the suspension of crypto transactions, asset seizure measures, enforcement, and penalties."
    *   **Source:** Coinpedia, "Crypto Regulations In China 2025," June 24, 2025.
    *   **URL:** [https://coinpedia.org/crypto-regulation/china/](https://coinpedia.org/crypto-regulation/china/)

5.  **Rationale & Scope of Ban:**
    *   **Excerpt:** "According to the PBOC circular, the authorities that jointly issued the circular will cooperate to establish a working mechanism to deal with the speculative risks of cryptocurrency trading. It outlines the specific measures the central and local authorities will take, including monitoring online and offline cryptocurrency-related activities and “severely cracking down” on criminal offenses involving cryptocurrencies, such as money laundering and cross-border gambling."
    *   **Source:** Law Library of Congress, "China: Central Bank Issues New Regulatory Document on Cryptocurrency Trading," October 13, 2021.
    *   **URL:** [https://www.loc.gov/item/global-legal-monitor/2021-10-13/china-central-bank-issues-new-regulatory-document-on-cryptocurrency-trading/](https://www.loc.gov/item/global-legal-monitor/2021-10-13/china-central-bank-issues-new-regulatory-document-on-cryptocurrency-trading/)

6.  **Services from Overseas Exchanges:**
    *   **Excerpt:** "The PBOC circular notably states that overseas cryptocurrency exchanges providing services to Chinese residents through the internet is also illegal."
    *   **Source:** Law Library of Congress, "China: Central Bank Issues New Regulatory Document on Cryptocurrency Trading," October 13, 2021.
    *   **URL:** [https://www.loc.gov/item/global-legal-monitor/2021-10-13/china-central-bank-issues-new-regulatory-document-on-cryptocurrency-trading/](https://www.loc.gov/item/global-legal-monitor/2021-10-13/china-central-bank-issues-new-regulatory-document-on-cryptocurrency-trading/)

7.  **Rationale for Ban (Financial Crime & Capital Flight):**
    *   **Excerpt:** "In late September 2021, the People's Bank of China (PBOC) banned all cryptocurrency transactions. The PBOC cited the role of cryptocurrencies in facilitating financial crime as well as posing a growing risk to China's financial system owing to their highly speculative nature. However, one other possible reason behind the cryptocurrency ban is an attempt to combat capital flight from China."
    *   **Source:** World Economic Forum, "What's behind China's cryptocurrency ban?," January 31, 2022.
    *   **URL:** [https://www.weforum.org/agenda/2022/01/what-s-behind-china-s-cryptocurrency-ban/](https://www.weforum.org/agenda/2022/01/what-s-behind-china-s-cryptocurrency-ban/)

8.  **AML/KYC Context (despite ban):**
    *   **Excerp:** "...China's new law also requires financial institutions pay attention to risks stemming from “the use of new technologies and products”, with experts highlighting that virtual assets have become a frequently used tool by money launderers and are a pressing challenge. In 2022, the Chinese police arrested 63 people accused of laundering 12 billion yuan ($1.6 billion) in criminal proceeds through the cryptocurrency Tether despite the trade in cryptocurrencies being illegal in China."
    *   **Source:** VinciWorks, "China's new AML laws are an upgrade, but could prove a risk," November 13, 2024.
    *   **URL:** [https://vinciworks.com/blog/chinas-new-aml-laws-are-an-upgrade-but-could-prove-a-risk/](https://vinciworks.com/blog/chinas-new-aml-laws-are-an-upgrade-but-could-prove-a-risk/)

9.  **Nuance on Personal Ownership (Pre-2025 reports):**
    *   **Excerpt:** "The Shanghai High People's Court, in a ruling last November, classified Bitcoin and other cryptocurrencies as virtual commodities, granting them legal status as property for individual ownership. This decision effectively overturned China's long-standing ban on personal crypto holdings... The court's statement... clarified that while individuals can now legally own and hold digital assets, business activities such as trading, mining, and operating exchanges remain strictly prohibited."
    *   **Source:** Crypto News (cryptonews.com), "China Shifts Stance: Personal Ownership of Bitcoin and Crypto Now Permitted," March 19, 2025.
    *   **URL:** [https://cryptonews.com/news/china-shifts-stance-personal-ownership-of-bitcoin-and-crypto-now-permitted.htm](https://cryptonews.com/news/china-shifts-stance-personal-ownership-of-bitcoin-and-crypto-now-permitted.htm)
    *(Note: This source indicates a shift allowing personal ownership based on a Nov 2024 court ruling, which contrasts with other early-mid 2025 reports of a full ban on ownership. This highlights potential complexities or evolving interpretations, though the dominant and most recent regulatory signals point to a comprehensive ban.)*

10. **Reinforcement of Ban (Mainland vs. Hong Kong):**
    *   **Excerpt:** "In the 2024 Financial Stability report released on Friday, the PBOC pointed out that 51 jurisdictions globally have issued bans or restrictions on cryptocurrency assets... In September 2021, the central bank and several other central authorities issued a notice banning all crypto trading and mining activities on the mainland. Hong Kong, however, has opened its doors to crypto firms."
    *   **Source:** The Block, "China's central bank emphasizes crypto regulation in annual financial stability report," December 30, 2024.
    *   **URL:** [https://www.theblock.co/post/272004/chinas-central-bank-emphasizes-crypto-regulation-in-annual-financial-stability-report](https://www.theblock.co/post/272004/chinas-central-bank-emphasizes-crypto-regulation-in-annual-financial-stability-report)