As of 2025, mainland China's laws continue to comprehensively prohibit cryptocurrency trading and mining. However, Hong Kong, as a Special Administrative Region, has established a regulated digital asset framework, which may signal a subtle softening of the central government's stance.

China was once a global leader in Bitcoin mining and hosted major exchanges, but the stringent 2021 ban caused a significant exodus of mining operations and exchanges (like Huobi, OKX, Binance) overseas, many of which still hold substantial global market share.

Despite the ban, the Chinese government may hold cryptocurrencies, likely seized from criminal activities (e.g., the PlusToken scam), though the specific disposition of these assets remains undisclosed.

In response to the global expansion of USD-backed stablecoins (e.g., the US GENIUS Act), China is accelerating the promotion of its digital yuan (e-CNY) to reduce reliance on the USD-dominated system. Concurrently, Hong Kong introduced stablecoin regulations in 2025, positioning itself as an innovation testing ground.

Hong Kong acts as a regulatory sandbox under the "one country, two systems" model, allowing controlled cryptocurrency innovation (like its stablecoin licensing regime). This provides a reference for potential future policy adjustments by the central government, although mainland China is expected to maintain its strict ban in the short term.

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Preface

Over the past decade, China's cryptocurrency landscape has undergone dramatic shifts. From early dominance in Bitcoin mining to the severe regulatory crackdown in 2021 that led to an almost total ban on trading and mining, mainland China's stance has run the gamut—from embracing the industry to nearly eradicating it.

In 2021, the People's Republic of China (PRC) banned cryptocurrency trading and mining on the mainland. Simultaneously, Hong Kong, a Special Administrative Region with an independent legal system, established a regulated framework for digital assets through the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC). Some analysts believe developments in Hong Kong could serve as a reference for future mainland policy.

As of 2025, according to mainland Chinese law, the government continues to prohibit cryptocurrency trading and mining. However, subtle shifts in regulatory posture and developments in Hong Kong suggest a potential, albeit cautious, softening of the central government's position.

Executive Summary

* China once dominated global Bitcoin mining and centralized exchanges, but regulatory bans quickly diminished its dominance in the industry.

* Most of China's mining operations and centralized exchanges relocated overseas, with many remaining globally dominant today.

* Following the US strengthening USD-backed stablecoins via the GENIUS Act, China has emphasized developing the digital yuan to reduce dollar dependence.

* Analysts describe Hong Kong as a regulatory sandbox within China's "one country, two systems" structure. Its 2025 stablecoin regulations act as a bridge between mainland China's strict control and global cryptocurrency innovation.

China's Crypto Context

China was an early adopter of cryptocurrency, particularly in Bitcoin mining. The year 2013 was a turning point for Chinese mining as Bitcoin gained national media attention, spurring the founding of numerous companies in the sector, including miners themselves and ASIC hardware manufacturers. Notably, Bitmain, now the largest ASIC manufacturer, was founded during this period. Many mining operators relocated to regions with cheaper electricity to optimize operations further. The rapid early adoption led to China dominating the global Bitcoin hashrate, peaking at an estimated 60-75% share between 2017 and 2020.

The crypto boom in China over these six to seven years also gave rise to several exchanges, including Huobi, OKX (formerly OKCoin), and Binance, which grew into industry giants. In fact, Binance still maintains a leading position among centralized exchanges today.

Huobi, OKX, and Binance were all founded in mainland China between 2013 and 2017 but relocated overseas following a 2017 regulatory crackdown, continuing to operate as global exchanges. As 2021 arrived, the regulatory environment tightened further, initially targeting Bitcoin mining operations before expanding to cover trading and services. Despite the strict bans, China's global influence persists, as miners and exchanges moved operations to neighboring countries like Kazakhstan and Russia.

Chinese Government Holdings of Cryptocurrency

Despite the bans, the Chinese government likely holds cryptocurrency. As with many governments, these assets are presumed to originate mainly from seizures related to crypto crimes, notably the PlusToken Ponzi scheme.

PlusToken was a Ponzi scheme that promised attractive daily returns using a non-existent arbitrage trading platform. It surfaced in April 2018, duping over 2.6 million users within a year, primarily from China and South Korea. The PlusToken team was estimated to hold assets worth $2.2 billion, predominantly in Bitcoin, but also including ETH, XRP, LTC, and EOS.

Following the scheme's collapse and the arrest of its perpetrators, Chinese authorities seized these assets. A court ruling stated the assets would be "disposed of according to law, with the proceeds turned over to the national treasury." However, official confirmation on whether the Chinese government still holds these assets or has sold them remains absent.

On-chain analysts, such as CryptoQuant CEO Ki Young Ju, suspect the Bitcoin may have been sold, transferred through mixers, and sent to various exchanges, including Huobi, for liquidation. Furthermore, movements of over $445 million in ETH from PlusToken-linked addresses in 2024 indicated ongoing redistribution or liquidation.

China's Crypto Bans

The first significant blow to China's crypto industry came in December 2013 when the People's Bank of China (PBOC) issued a notice prohibiting financial institutions from handling Bitcoin, classifying it as a commodity rather than a currency.

During the 2017 Initial Coin Offering (ICO) boom, the PBOC and six other government departments issued a ban on ICOs and token financing activities, also demanding all domestic centralized exchanges cease operations.

Regulatory intensity escalated in 2021. Building on earlier rules, in May 2021, financial institutions and payment companies were banned from providing crypto-related services. In June 2021, measures targeted Bitcoin mining activities in key mining hubs like Inner Mongolia, Xinjiang, and Sichuan, citing environmental concerns over power consumption. This crackdown prompted a mass migration of major Chinese Bitcoin mining companies to neighboring countries like Kazakhstan and Russia, which now account for a significant share of the global hashrate.

The most decisive blow came in September 2021 when China's top regulatory authorities, including the PBOC, issued a joint statement formally banning all cryptocurrency transactions, both crypto-to-fiat and crypto-to-crypto, regardless of the platform. This ban effectively declared all cryptocurrency trading illegal, representing the harshest prohibition to date.

Despite restrictions on transactions and services involving cryptocurrency, personal holding of cryptocurrencies is not explicitly illegal.

Stablecoins

In 2025, the United States established a comprehensive regulatory framework for stablecoins through the GENIUS Act, signed into law by President Trump in July. This legislation marked a historic step towards clarity and oversight for stablecoin issuance and use, particularly regarding issuance and collateral requirements. The GENIUS Act restricts stablecoin issuance to insured depository institutions and approved non-bank entities, ensuring all issued stablecoins are backed 1:1 by high-quality liquid assets. The act also mandates strict transparency, Anti-Money Laundering (AML), and consumer protection requirements. By establishing predictable standards and enhancing trust, the legislation fosters wider stablecoin adoption, further cementing the US dollar's dominance in global digital payments and settlement and reinforcing its status as the premier global reserve currency.

Facing this strengthening dollar dominance, China has intensified its efforts in the stablecoin arena to promote the internationalization of the Renminbi (RMB), which currently accounts for only about 2.9% of global payments. China's primary focus remains promoting its Central Bank Digital Currency (CBDC), the digital yuan (e-CNY), aiming to enhance monetary sovereignty and reduce reliance on the USD-based international financial system.

This move, differing from its harsh stance on crypto since 2021, might signal a subtle softening of China's hardline anti-crypto position. While mainland China maintains its broad ban on crypto-related activities, Hong Kong has been engaging in controlled innovation under its own regulators, the HKMA and SFC. Some commentators view Hong Kong's evolving regulatory regime as a potential testing ground for central government policymakers. In August 2025, the HKMA implemented the Stablecoin Ordinance in Hong Kong, establishing a licensing regime for stablecoin issuers.

Hong Kong

With the latest developments in stablecoins, Hong Kong has emerged as a leading hub for cryptocurrency innovation in the Greater China region, built upon a comprehensive stablecoin regulatory framework and growing institutional interest.

In August 2025, the HKMA launched a licensing regime for stablecoin issuers under the Stablecoin Ordinance, setting stringent requirements for capital adequacy, reserve asset segregation, and AML controls, while allowing licensed banks and fintech firms to issue USD and asset-backed tokens for retail and wholesale use. This regulatory clarity has attracted prominent advocates, including Eric Trump, who engaged with Hong Kong legislators and industry forums to support crypto entrepreneurship, indicating confidence in Hong Kong's legal certainty and its role as a bridge between East and West.

Observers perceive the central government's attitude towards Hong Kong's thriving crypto ecosystem as strategic rather than lenient, effectively using the Special Administrative Region (SAR) as a controlled testing ground for digital asset integration. By allowing Hong Kong to pioneer stablecoin frameworks and pilot cross-border settlement projects, the central government can monitor risks and benefits before considering wider adoption on the mainland. Some analysts term this the "sandbox model," which enables Chinese authorities to observe operational resilience, compliance challenges, and market dynamics, potentially informing future policies regarding decentralized cryptocurrencies and Digital Yuan interoperability, while maintaining its strict crypto ban on the mainland.

Conclusion

Mainland China's relationship with cryptocurrency in 2025 might seem paradoxical at first glance: resolutely banning the domestic use of decentralized cryptocurrencies while cautiously observing and learning from the controlled digital asset experiments ongoing in Hong Kong.

While the central government remains committed to the digital yuan as its primary vehicle for financial innovation and monetary influence, the establishment of a regulated stablecoin ecosystem in Hong Kong acknowledges the growing role of crypto in global finance. This dual-track model allows mainland China to maintain strict domestic control while still monitoring (and in some ways benefiting from) international developments, especially as the US consolidates its dominance through comprehensive stablecoin regulation.

For investors, entrepreneurs, and policymakers, the message is clear: while mainland China remains largely closed to open crypto markets, Hong Kong is emerging as a strategically significant hub potentially shaping the future of digital assets in the region. Whether this ultimately leads to a further softening of the central government's stance will depend on its balancing of state control, economic opportunity, and global competition.

As of 2025, mainland China's laws continue to comprehensively prohibit cryptocurrency trading and mining. However, Hong Kong, as a Special Administrative Region, has established a regulated digital asset framework, which may signal a subtle softening of the central government's stance.

China was once a global leader in Bitcoin mining and hosted major exchanges, but the stringent 2021 ban caused a significant exodus of mining operations and exchanges (like Huobi, OKX, Binance) overseas, many of which still hold substantial global market share.

Despite the ban, the Chinese government may hold cryptocurrencies, likely seized from criminal activities (e.g., the PlusToken scam), though the specific disposition of these assets remains undisclosed.

In response to the global expansion of USD-backed stablecoins (e.g., the US GENIUS Act), China is accelerating the promotion of its digital yuan (e-CNY) to reduce reliance on the USD-dominated system. Concurrently, Hong Kong introduced stablecoin regulations in 2025, positioning itself as an innovation testing ground.

Hong Kong acts as a regulatory sandbox under the "one country, two systems" model, allowing controlled cryptocurrency innovation (like its stablecoin licensing regime). This provides a reference for potential future policy adjustments by the central government, although mainland China is expected to maintain its strict ban in the short term.

---

Preface

Over the past decade, China's cryptocurrency landscape has undergone dramatic shifts. From early dominance in Bitcoin mining to the severe regulatory crackdown in 2021 that led to an almost total ban on trading and mining, mainland China's stance has run the gamut—from embracing the industry to nearly eradicating it.

In 2021, the People's Republic of China (PRC) banned cryptocurrency trading and mining on the mainland. Simultaneously, Hong Kong, a Special Administrative Region with an independent legal system, established a regulated framework for digital assets through the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC). Some analysts believe developments in Hong Kong could serve as a reference for future mainland policy.

As of 2025, according to mainland Chinese law, the government continues to prohibit cryptocurrency trading and mining. However, subtle shifts in regulatory posture and developments in Hong Kong suggest a potential, albeit cautious, softening of the central government's position.

Executive Summary

* China once dominated global Bitcoin mining and centralized exchanges, but regulatory bans quickly diminished its dominance in the industry.

* Most of China's mining operations and centralized exchanges relocated overseas, with many remaining globally dominant today.

* Following the US strengthening USD-backed stablecoins via the GENIUS Act, China has emphasized developing the digital yuan to reduce dollar dependence.

* Analysts describe Hong Kong as a regulatory sandbox within China's "one country, two systems" structure. Its 2025 stablecoin regulations act as a bridge between mainland China's strict control and global cryptocurrency innovation.

China's Crypto Context

China was an early adopter of cryptocurrency, particularly in Bitcoin mining. The year 2013 was a turning point for Chinese mining as Bitcoin gained national media attention, spurring the founding of numerous companies in the sector, including miners themselves and ASIC hardware manufacturers. Notably, Bitmain, now the largest ASIC manufacturer, was founded during this period. Many mining operators relocated to regions with cheaper electricity to optimize operations further. The rapid early adoption led to China dominating the global Bitcoin hashrate, peaking at an estimated 60-75% share between 2017 and 2020.

The crypto boom in China over these six to seven years also gave rise to several exchanges, including Huobi, OKX (formerly OKCoin), and Binance, which grew into industry giants. In fact, Binance still maintains a leading position among centralized exchanges today.

Huobi, OKX, and Binance were all founded in mainland China between 2013 and 2017 but relocated overseas following a 2017 regulatory crackdown, continuing to operate as global exchanges. As 2021 arrived, the regulatory environment tightened further, initially targeting Bitcoin mining operations before expanding to cover trading and services. Despite the strict bans, China's global influence persists, as miners and exchanges moved operations to neighboring countries like Kazakhstan and Russia.

Chinese Government Holdings of Cryptocurrency

Despite the bans, the Chinese government likely holds cryptocurrency. As with many governments, these assets are presumed to originate mainly from seizures related to crypto crimes, notably the PlusToken Ponzi scheme.

PlusToken was a Ponzi scheme that promised attractive daily returns using a non-existent arbitrage trading platform. It surfaced in April 2018, duping over 2.6 million users within a year, primarily from China and South Korea. The PlusToken team was estimated to hold assets worth $2.2 billion, predominantly in Bitcoin, but also including ETH, XRP, LTC, and EOS.

Following the scheme's collapse and the arrest of its perpetrators, Chinese authorities seized these assets. A court ruling stated the assets would be "disposed of according to law, with the proceeds turned over to the national treasury." However, official confirmation on whether the Chinese government still holds these assets or has sold them remains absent.

On-chain analysts, such as CryptoQuant CEO Ki Young Ju, suspect the Bitcoin may have been sold, transferred through mixers, and sent to various exchanges, including Huobi, for liquidation. Furthermore, movements of over $445 million in ETH from PlusToken-linked addresses in 2024 indicated ongoing redistribution or liquidation.

China's Crypto Bans

The first significant blow to China's crypto industry came in December 2013 when the People's Bank of China (PBOC) issued a notice prohibiting financial institutions from handling Bitcoin, classifying it as a commodity rather than a currency.

During the 2017 Initial Coin Offering (ICO) boom, the PBOC and six other government departments issued a ban on ICOs and token financing activities, also demanding all domestic centralized exchanges cease operations.

Regulatory intensity escalated in 2021. Building on earlier rules, in May 2021, financial institutions and payment companies were banned from providing crypto-related services. In June 2021, measures targeted Bitcoin mining activities in key mining hubs like Inner Mongolia, Xinjiang, and Sichuan, citing environmental concerns over power consumption. This crackdown prompted a mass migration of major Chinese Bitcoin mining companies to neighboring countries like Kazakhstan and Russia, which now account for a significant share of the global hashrate.

The most decisive blow came in September 2021 when China's top regulatory authorities, including the PBOC, issued a joint statement formally banning all cryptocurrency transactions, both crypto-to-fiat and crypto-to-crypto, regardless of the platform. This ban effectively declared all cryptocurrency trading illegal, representing the harshest prohibition to date.

Despite restrictions on transactions and services involving cryptocurrency, personal holding of cryptocurrencies is not explicitly illegal.

Stablecoins

In 2025, the United States established a comprehensive regulatory framework for stablecoins through the GENIUS Act, signed into law by President Trump in July. This legislation marked a historic step towards clarity and oversight for stablecoin issuance and use, particularly regarding issuance and collateral requirements. The GENIUS Act restricts stablecoin issuance to insured depository institutions and approved non-bank entities, ensuring all issued stablecoins are backed 1:1 by high-quality liquid assets. The act also mandates strict transparency, Anti-Money Laundering (AML), and consumer protection requirements. By establishing predictable standards and enhancing trust, the legislation fosters wider stablecoin adoption, further cementing the US dollar's dominance in global digital payments and settlement and reinforcing its status as the premier global reserve currency.

Facing this strengthening dollar dominance, China has intensified its efforts in the stablecoin arena to promote the internationalization of the Renminbi (RMB), which currently accounts for only about 2.9% of global payments. China's primary focus remains promoting its Central Bank Digital Currency (CBDC), the digital yuan (e-CNY), aiming to enhance monetary sovereignty and reduce reliance on the USD-based international financial system.

This move, differing from its harsh stance on crypto since 2021, might signal a subtle softening of China's hardline anti-crypto position. While mainland China maintains its broad ban on crypto-related activities, Hong Kong has been engaging in controlled innovation under its own regulators, the HKMA and SFC. Some commentators view Hong Kong's evolving regulatory regime as a potential testing ground for central government policymakers. In August 2025, the HKMA implemented the Stablecoin Ordinance in Hong Kong, establishing a licensing regime for stablecoin issuers.

Hong Kong

With the latest developments in stablecoins, Hong Kong has emerged as a leading hub for cryptocurrency innovation in the Greater China region, built upon a comprehensive stablecoin regulatory framework and growing institutional interest.

In August 2025, the HKMA launched a licensing regime for stablecoin issuers under the Stablecoin Ordinance, setting stringent requirements for capital adequacy, reserve asset segregation, and AML controls, while allowing licensed banks and fintech firms to issue USD and asset-backed tokens for retail and wholesale use. This regulatory clarity has attracted prominent advocates, including Eric Trump, who engaged with Hong Kong legislators and industry forums to support crypto entrepreneurship, indicating confidence in Hong Kong's legal certainty and its role as a bridge between East and West.

Observers perceive the central government's attitude towards Hong Kong's thriving crypto ecosystem as strategic rather than lenient, effectively using the Special Administrative Region (SAR) as a controlled testing ground for digital asset integration. By allowing Hong Kong to pioneer stablecoin frameworks and pilot cross-border settlement projects, the central government can monitor risks and benefits before considering wider adoption on the mainland. Some analysts term this the "sandbox model," which enables Chinese authorities to observe operational resilience, compliance challenges, and market dynamics, potentially informing future policies regarding decentralized cryptocurrencies and Digital Yuan interoperability, while maintaining its strict crypto ban on the mainland.

Conclusion

Mainland China's relationship with cryptocurrency in 2025 might seem paradoxical at first glance: resolutely banning the domestic use of decentralized cryptocurrencies while cautiously observing and learning from the controlled digital asset experiments ongoing in Hong Kong.

While the central government remains committed to the digital yuan as its primary vehicle for financial innovation and monetary influence, the establishment of a regulated stablecoin ecosystem in Hong Kong acknowledges the growing role of crypto in global finance. This dual-track model allows mainland China to maintain strict domestic control while still monitoring (and in some ways benefiting from) international developments, especially as the US consolidates its dominance through comprehensive stablecoin regulation.

For investors, entrepreneurs, and policymakers, the message is clear: while mainland China remains largely closed to open crypto markets, Hong Kong is emerging as a strategically significant hub potentially shaping the future of digital assets in the region. Whether this ultimately leads to a further softening of the central government's stance will depend on its balancing of state control, economic opportunity, and global competition.