China Cryptocurrency: A Guide to the 2025 Crypto Landscape

Foreword

Since China's initial foray into the cryptocurrency space over a decade ago, the Chinese cryptocurrency landscape has evolved significantly. From Bitcoin mining's early dominance to a 2021 regulatory crackdown that culminated in a near-total ban on cryptocurrency trading and mining, mainland China's stance on cryptocurrency has run the gamut: from embracing the industry to outright eradication.

In 2021, the People's Republic of China (PRC) banned cryptocurrency trading and mining on the mainland. Meanwhile, 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 that Hong Kong's developments may provide a reference for future mainland Chinese policy.

As of 2025, the government continues to prohibit cryptocurrency trading and mining under mainland Chinese law. However, subtle shifts in regulatory stance and developments in Hong Kong suggest a possible softening of the central government's stance. Summary: China once dominated global Bitcoin mining and centralized exchanges, but regulatory bans quickly eroded its dominance in the industry. Most of China's mining operations and centralized exchanges have moved overseas, though many still hold dominant global positions. Following the passage of the GENIUS Act in the United States, which strengthened dollar-backed stablecoins, China has emphasized the development of a digital yuan to reduce its reliance on the dollar. Analysts describe Hong Kong as a regulatory sandbox within China's "one country, two systems" framework, with the city's 2025 Stablecoin Ordinance serving as a bridge between mainland China's strict controls and global cryptocurrency innovation. China's Cryptocurrency Background China was an early adopter of cryptocurrency, particularly in Bitcoin mining. 2013 marked a turning point for Chinese mining, as Bitcoin began to garner national media attention. This spurred the establishment of numerous companies in the sector, including miners and ASIC mining hardware manufacturers. Notably, Bitmain, currently the largest ASIC mining hardware manufacturer, was founded during this period. Many mining operators in the country also relocated to regions with cheaper electricity to further optimize their operations. The rapid early adoption of Bitcoin mining in China led to China's dominance of Bitcoin's hash rate, ultimately reaching a peak share of 60-75% between 2017 and 2020. China's dominance in Bitcoin mining declined from 2019 to 2021 - Kraken. During these six or seven years, China's cryptocurrency boom also spawned the establishment of several exchanges, including Huobi, OKX (formerly OKCoin), and Binance, which eventually grew into industry giants. In fact, Binance still maintains its leading position among centralized exchanges, accounting for approximately 35% of spot trading volume and 50% of derivatives trading volume. Huobi, OKX, and Binance were all founded in mainland China between 2013 and 2017 but relocated overseas after a 2017 regulatory crackdown, continuing to operate as global exchanges. As 2021 progressed, the regulatory environment gradually tightened, first targeting Bitcoin mining operations and subsequently expanding to buying, selling, services, and trading. Despite strict bans, China's global influence persisted, as miners and exchanges relocated their operations to neighboring Kazakhstan and Russia. Despite the Chinese government's ban, the Chinese government likely still holds cryptocurrency. Like many other governments, these assets are believed to be largely derived from criminal seizures related to cryptocurrency, particularly the PlusToken Ponzi scheme. PlusToken was a Ponzi scheme that exploited a nonexistent arbitrage trading platform and offered tantalizing daily returns. The scam, which surfaced in April 2018, lured over 2.6 million users, primarily from China and South Korea, within a year. As of now, the PlusToken team holds an estimated $2.2 billion in assets, primarily in Bitcoin. Other tokens held by PlusToken include ETH, XRP, LTC, and EOS. Assets Confiscated from the PlusToken Scam - The Block Following the collapse of the scam and the arrest of its operators, Chinese authorities seized these assets. According to the court ruling, these assets will be "handled in accordance with the law, and the proceeds will be turned over to the state treasury." However, there has been no official confirmation as to whether the Chinese government still holds these assets or has sold them. On-chain analysts, such as Ki Young Ju, CEO of CryptoQuant, believe that the Bitcoin may have been sold, transferred through mixers, and sent to various exchanges, including Huobi, for liquidation. Furthermore, the movement of over $445 million in ETH from PlusToken-associated addresses in 2024 also suggests some form of redistribution or liquidation is underway.

ETH transfers from PlusToken-associated addresses in 2024 - Arkham

China’s Cryptocurrency Ban

The first blow to China’s cryptocurrency industry came in December 2013, when the People’s Bank of China issued a notice prohibiting financial institutions from handling Bitcoin, treating it as a commodity rather than a currency.

During the 2017 initial coin offering (ICO) boom, the People’s Bank of China and six other government departments issued a ban on ICOs and token fundraising activities, and required all domestic centralized exchanges to cease operations. In 2021, regulatory measures were further strengthened. In May 2021, financial institutions and payment companies were banned from providing cryptocurrency-related services, building on initial regulations. In June 2021, major mining centers such as Inner Mongolia, Xinjiang, and Sichuan introduced a crackdown on Bitcoin mining activities, citing the environmental impact of electricity consumption. This crackdown led to an exodus of large Chinese Bitcoin mining companies to neighboring countries such as Kazakhstan and Russia, which now account for a large share of global computing power. The heaviest blow came in September 2021, when China’s top regulators, including the People’s Bank of China, issued a joint statement formally banning all cryptocurrency trading, including crypto-to-fiat and crypto-to-cryptocurrency transactions, regardless of the platform used. The ban, which effectively outlawed all cryptocurrency transactions, was the harshest to date. While there are restrictions on transactions and services involving cryptocurrencies, personal possession of cryptocurrencies is not explicitly illegal. 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 forward in clarifying and overseeing the issuance and use of stablecoins, particularly regarding their issuance and collateral requirements. The GENIUS Act restricts the issuance of stablecoins to insured depository institutions and approved financial institutions, ensuring that all issued stablecoins are backed 1:1 by high-quality liquid assets (such as cash, U.S. Treasury bonds, and other low-risk securities). The act also imposes strict transparency, anti-money laundering (AML), and consumer protection requirements. By establishing predictable standards and fostering trust, the legislation fosters wider adoption of stablecoins, further solidifying the dollar's dominance in global digital payments and settlements, and strengthening its position as the preferred global reserve currency. RMB accounts for 2.88% of global payments - Trade Treasury Payments Faced with the growing dominance of the US dollar, China has increased its investment in stablecoins to promote the internationalization of the RMB. The RMB currently accounts for only approximately 2.9% of total global payments. China's primary focus remains on promoting its central bank digital currency (CBDC), the digital RMB (e-CNY), aimed at strengthening monetary sovereignty and reducing reliance on the US dollar-based international financial system. This move marks a departure from its harsh stance on cryptocurrencies since 2021 and may signal a softening of China's hardline anti-cryptocurrency stance. While mainland China maintains a broad ban on cryptocurrency-related activities, Hong Kong has been conducting controlled innovation under the supervision of its own regulators, the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC). Some commentators believe that Hong Kong's evolving regulatory regime can serve as a 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. With recent developments in the stablecoin sector, Hong Kong has become a leading center for cryptocurrency innovation in Greater China, underpinned by 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, imposing strict requirements on capital adequacy, segregation of reserve assets, and anti-money laundering controls, while also allowing licensed banks and fintech firms to issue US dollar- and asset-backed tokens for retail and wholesale use. This regulatory clarity has attracted prominent advocates, including Eric Trump, who has engaged with Hong Kong lawmakers and industry forums in support of cryptocurrency startups, demonstrating confidence in Hong Kong's legal certainty and its role as a bridge between East and West. Observers believe the central government's approach to Hong Kong's burgeoning crypto ecosystem is strategic rather than permissive, effectively using the Special Administrative Region (SAR) as a controlled testing ground for digital asset integration. By allowing Hong Kong to pioneer a stablecoin framework and pilot cross-border settlement projects, the central government can monitor risks and benefits before considering wider adoption on the mainland. Dubbed a "sandbox model" by some analysts, it allows Chinese authorities to observe operational resilience, compliance challenges, and market dynamics, potentially informing future policies regarding decentralized cryptocurrencies and the interoperability of the digital yuan, while maintaining its strict cryptocurrency ban on the mainland. Conclusion: Mainland China's relationship with cryptocurrency in 2020 may seem contradictory at first glance: a resolute ban on decentralized cryptocurrencies within its borders, yet a willingness to cautiously observe and learn from Hong Kong's ongoing experiments with controlled digital assets. While the central government remains committed to the digital yuan as its primary vehicle for financial innovation and monetary influence, the development of a regulated stablecoin ecosystem in Hong Kong demonstrates its recognition of the growing role of cryptocurrencies in global finance. This dual-track approach allows mainland China to maintain strict domestic regulation while still monitoring (and, in some cases, benefiting from) international developments, particularly as the United States consolidates its dominance through comprehensive stablecoin regulation. For investors, entrepreneurs, and policymakers, the message is clear: while mainland China remains closed to opening up its cryptocurrency market, Hong Kong is emerging as a strategic hub that could shape the future of digital assets in the region. Whether this ultimately leads the central government to further soften its stance will depend on the balance it strikes between state control, economic opportunities and global competition.