China’s relationship with cryptocurrency is one of the most complex stories in global digital finance, mainly because, on the surface, China has strict rules that make most crypto activities illegal. But underneath the ban, millions of people still use and trade crypto, and other parts of China’s broader digital economy are shaping how blockchain technology evolves.
In this article, we will look at the data behind that story, from legal bans to underground trading, Hong Kong regulation, digital yuan usage, and mining activity, to provide a comprehensive snapshot of crypto in China during 2025–2026.
Still a Giant in Crypto Despite the Ban
China banned almost all cryptocurrency activity in 2021 and reaffirmed that stance in 2025, making private ownership, trading, and mining of Bitcoin and other cryptos illegal. Mainland regulators have even expanded the ban recently to include areas like tokenization of real-world assets and stablecoin promotion unless approved by authorities. This was reinforced by the People’s Bank of China and several government bodies, which declared that unauthorized crypto activities are illegal financial conduct.
Even with this hard stance, estimated crypto activity has not disappeared, and analysts report that there are still around 59 million crypto users in China as of 2025. That’s roughly 10% of the global crypto user base, even though most users must operate outside official channels.
RELATED: Assessing The Impact of China’s Crypto Crackdown
Underground Trading and OTC Activity
Since formal exchange trading is banned, crypto trading in China has pushed into informal or underground channels, and some of these include over-the-counter (OTC) deals and transactions arranged through decentralized exchanges or peer-to-peer networks using VPNs to get around geographic blocks.
Data from blockchain analytics strongly suggests that Chinese crypto traders have continued to trade through OTC markets despite the ban. Nikkei Asia reported that OTC crypto trading volume linked to China reached $23.7 billion in 2024, and other estimates place underground inflows around $75 billion over nine months in 2024.
These OTC activities show that demand for crypto has persisted even when trading on major exchanges is illegal. Traders use encrypted messaging apps, private group contacts, and VPNs to remain active in the market.
READ ALSO: OTC vs Exchange Trading: A Simple Guide To Making The Right Choice
Hong Kong’s Parallel Crypto Market
Within China’s territory, Hong Kong has a very different environment. Unlike mainland China, Hong Kong has legal frameworks for crypto and is actively positioning itself as a regulated digital asset hub.
In May 2025, Hong Kong passed a stablecoin bill requiring that any stablecoin issuer in the city obtain a license from the Hong Kong Monetary Authority (HKMA). This law sets standards for reserve backing, redemption processes, and risk controls to protect investors and the public.
Hong Kong’s crypto regulation includes licensing for exchanges, stablecoin issuers, and other virtual asset service providers. It has also been working on rules that allow OTC trading, custody services, and institutional investor participation within a regulated space. Financial professionals see this as part of a strategy to boost Hong Kong’s role in global digital asset markets.
This regulatory divergence, that is, strict prohibition in the mainland and innovation in Hong Kong, tends to create a dual-track crypto system in China’s broader economic sphere. People in the mainland often find ways to access Hong Kong’s regulated market, using it as a gateway to crypto that is otherwise banned at home.
Digital Yuan (e-CNY) Adoption
While private cryptocurrencies face heavy restrictions, China has fully embraced its own central bank digital currency (CBDC) known as the digital yuan (e-CNY). By late 2025, e-CNY platforms had processed over 14.2 trillion yuan in transactions and were used by more than 260 million wallets, making it one of the largest CBDC programs in the world.
The digital yuan is part of China’s strategy to modernize payments and strengthen central control of its financial system. It is also being piloted for use in government services, transportation, and retail payments across multiple provinces.
This strong support for the e-CNY shows that China is not against digital finance itself; it is against decentralized digital assets that could operate outside government supervision.
Mining Comeback Underground
Bitcoin mining was once heavily concentrated in China before 2021, but after a large crackdown that shut down most formal mining operations, miners moved abroad, settling in places like North America and Kazakhstan. However, mining activity connected to China has shown surprising resilience, especially in recent times.
Estimates indicate that China now contributes around 14% of global Bitcoin hashrate again, putting it among the top mining locations globally despite the legal prohibition. Analysts say this likely happens because excess data center capacity and cheap energy in some regions encourage underground mining.
Much of this mining occurs outside official visibility, and enforcement is uneven, with mining technically illegal, but economic incentives have kept the underground crypto market alive.
Market Size and Usage Trends
Because crypto is banned on official channels, accurate market size figures are hard to obtain. However, several estimates help sketch the picture:
- Around 59 million Chinese crypto users as of 2025, despite bans.
- OTC trading volumes in the tens of billions of dollars annually.
- Hong Kong serves as a regulated hub with growing licensed activity.
- Digital yuan adoption in the hundreds of millions of wallets.
This combination shows that the market size is big, but is split between official digital currency (e-CNY) and unofficial crypto usage underground and offshore.
Capital Controls and Crypto Usage
China maintains strict capital controls, i.e., rules that limit how much money can leave the country, and because of these controls, some citizens use cryptocurrencies or offshore channels to move value across borders or protect savings. While private crypto remains illegal, its underground demand is partly driven by economic incentives, such as diversifying assets and bypassing foreign exchange restrictions.
Hong Kong’s regulated crypto market also gives some Chinese investors a way to access digital assets legally through licensed intermediaries.
What This All Means
China’s crypto story is defined by paradoxes:
- A legal ban in the mainland that prohibits almost all private crypto activity.
- Millions of users still participate through OTC networks, VPNs, and offshore channels.
- Hong Kong’s regulatory embrace creates a legal space for virtual assets.
- A massive digital yuan system that is widely used for domestic transactions.
- Mining activity that has quietly resurged underground.
Together, these trends show that while China’s policies are among the strictest in the world, crypto usage continues to adapt, often moving into informal markets and regulated offshore environments.
Looking Forward
China’s strict ban will likely remain its official position, but the resilience of underground trading and the growth of digital yuan and Hong Kong’s legal market suggest that digital assets are not going away anytime soon.
How China navigates this complexity will continue shaping global crypto markets, especially given its sheer size, large population of users, and influence in technology and finance.
Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
Enjoyed this piece? Bookmark DeFi Planet, explore related topics, and follow us on Twitter, LinkedIn, Facebook, Instagram, Threads, and CoinMarketCap Community for seamless access to high-quality industry insights.
“Take control of your crypto portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”
