China's Cryptocurrency Ban 2025: Legal Status, Risks & E‑CNY Shift
Jul, 26 2025
China Crypto Penalty Calculator
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Under China's 2025 cryptocurrency ban (Circular No.237), companies face administrative fines of up to 10% of annual revenue for crypto-related activities.
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Maximum penalty: 10% of revenue
Note: This calculator demonstrates potential administrative fines based on China's Circular No.237 (June 2025). Actual penalties may vary based on specific circumstances and enforcement actions.
Cryptocurrency legal status in China is the collection of laws, circulars and enforcement actions that determine whether digital tokens can be owned, traded, mined or used within the People's Republic of China. Since 2017 the country has moved from early enthusiasm to a total prohibition, culminating in the comprehensive China crypto ban that took effect on June 1, 2025. This article breaks down the timeline, the penalties, the distinction between blockchain and private tokens, and what the future might hold for investors and businesses.
From Early Adoption to Total Prohibition: The Regulatory Timeline
The journey began in 2017 when the People's Bank of China (PBOC) issued its first warning against Initial Coin Offerings (ICOs). By September 2021, the PBOC declared all crypto‑related transactions illegal under Chinese law. The decisive step came with Circular No.237, issued in early 2025, which classified every crypto activity - from trading and mining to token‑issuance financing - as illegal financial activity.
- 2017 - PBOC bans ICOs and declares crypto a “virtual commodity”.
- 2019 - Exchanges ordered to cease fiat‑crypto conversion services.
- 2021 Sep - Official statement makes all crypto transactions illegal.
- 2024 - Nationwide mining crack‑downs intensify, with power cuts targeting large farms.
- 2025 Jun 1 - Circular No.237 enforces a complete ban on ownership, trading, mining, and related services.
The rapid escalation reflects Beijing’s growing concerns over financial stability, capital flight, and money‑laundering risks.
What Exactly Is Prohibited?
Under Circular No.237, the following actions are expressly illegal:
- Buying, selling or holding any cryptocurrency.
- Providing exchange, settlement, or custodial services for crypto assets.
- Operating mining facilities or providing hash‑power services.
- Issuing tokens, conducting ICOs or any form of token‑based fundraising.
- Offering price‑discovery, advisory or promotional services for crypto transactions.
- Facilitating cross‑border crypto payments, even for foreign nationals in China.
Financial institutions are barred from opening accounts tied to crypto activities, and any contracts related to private tokens are considered void.
Enforcement: Penalties and Real‑World Cases
Authorities employ both administrative and criminal measures. Administrative fines can reach up to 10 % of a company’s annual revenue, while criminal charges may lead to imprisonment for fraud or illegal fundraising. The courts have consistently ruled against investors trying to recover losses from scams, citing the underlying illegality of the transaction.
In early 2025, ten major exchanges withdrew from mainland China within a month of Circular No.237, and several former mining sites were seized in Inner Mongolia and Xinjiang. Local regulators also target promotional websites and self‑media channels that discuss crypto, issuing takedown orders and fines.
Distinguishing Blockchain from Cryptocurrency
China draws a clear line: blockchain technology is encouraged as a tool for transparency and state control, while private digital tokens are portrayed as a conduit for financial crime. The government continues to fund blockchain research, pilot applications in supply‑chain tracking, and the development of the state‑backed digital yuan.
Key governmental bodies involved include the People's Bank of China (China's central bank, responsible for monetary policy and issuing the digital yuan) and the Cyberspace Administration of China (regulates online content and enforces digital security laws).
The Rise of the Digital Yuan (e‑CNY)
While private crypto faces a total ban, the state pushes the Digital Yuan (also known as e‑CNY, a central bank digital currency issued by the PBOC). Pilot programs run in cities like Shenzhen, Suzhou and Chengdu, offering digital wallets that integrate with existing payment platforms. The e‑CNY aims to provide a sovereign alternative to both cash and private tokens, giving the government full traceability over transactions.
The strategy serves two purposes: it promotes financial inclusion while tightening the government's grip on monetary flows, effectively marginalizing decentralized alternatives.
Cross‑Border Business: What Foreign Companies Need to Know
Any offshore entity eyeing the Chinese market must obtain explicit approval from Chinese regulators before marketing crypto‑related services, even if the service is delivered outside mainland China. No licensing regime exists for crypto, so the safest route is to avoid any crypto activity targeted at Chinese residents.
Notably, the Shanghai Data Exchange (a state‑run platform that issued the first data‑asset backed financing instrument (RDA) in November 2024) has begun experimenting with tokenised data assets, but these remain distinct from prohibited cryptocurrencies and are tightly regulated.
Future Outlook: Will the Ban Ever Lift?
All signs point to the ban persisting for the foreseeable future. The government's narrative ties private crypto to illicit finance, and the ongoing rollout of the digital yuan reinforces the desire for a centralized digital payment system. Minor regulatory wiggles-like the data‑asset token experiment-do not indicate a softening stance toward private tokens.
Analysts predict that any relaxation would likely come only if the state finds a way to harness blockchain benefits without loss of control, perhaps through a tightly‑controlled “whitelisted” token framework. Until then, the China crypto ban remains a hard line.
Quick Reference Timeline
| Year | Key Action | Impact |
|---|---|---|
| 2017 | PBOC bans ICOs | Initial crackdown on fundraising via tokens |
| 2019 | Exchange fiat‑crypto services ordered to cease | Reduced public trading venues |
| 2021 Sep | All crypto transactions declared illegal | Criminal liability introduced |
| 2024 | Nationwide mining shutdowns | Hash‑power reduced by >90 % |
| 2025 Jun 1 | Circular No.237 enforces total ban | Ownership, trading, mining, ICOs prohibited |
Key Takeaways for Stakeholders
- Investors: Holding crypto assets in China carries risk of confiscation; consider repatriating holdings.
- Businesses: Any crypto‑related service targeting Chinese users is illegal; focus on compliant blockchain applications.
- Legal Professionals: Contracts involving private tokens are void; advise clients on the distinction between blockchain projects and prohibited crypto.
- Policymakers: Monitor enforcement trends and the rollout of the digital yuan for potential regulatory adjustments.
Is it illegal to own Bitcoin in China?
Ownership itself is not explicitly criminalized, but any attempt to trade, transfer, or use Bitcoin for payments is illegal. Authorities can confiscate crypto holdings and impose penalties.
Can foreign nationals trade crypto while visiting China?
No. The ban applies to all persons on Chinese territory, regardless of nationality. Violations can lead to fines or criminal charges.
What are the penalties for operating a crypto mining farm?
Mining operations are classified as illegal financial activity. Penalties range from administrative fines up to 10 % of annual revenue to criminal prosecution, including up to three years in prison.
How does the digital yuan differ from private cryptocurrencies?
The digital yuan is a central bank digital currency (CBDC) issued by the PBOC. It is legal tender, fully backed by the state, and fully traceable, whereas private cryptocurrencies are decentralized, not legal tender, and have been deemed a financial risk.
Is there any possibility of a regulated crypto exchange in China?
Current law provides no licensing pathway for crypto exchanges. Any future framework would require a fundamental policy shift, which appears unlikely in the near term.
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