China Crypto Exchange Ban: What Chinese Citizens Need to Know

When the China crypto exchange ban prohibited all cryptocurrency trading, mining, and ownership for mainland residents went into force on June 1 2025, the daily lives of millions of Chinese investors changed overnight. No longer could they buy Bitcoin on a local platform, transfer USDT to a foreign wallet, or even hold a private crypto address without risking legal action. This article unpacks the timeline, the specific rules, how enforcement works, and what practical options remain-if any-for Chinese citizens who still want a foothold in the digital‑asset world.

From Early Warnings to Full Prohibition: A Ten‑Year Timeline

The crackdown didn’t appear out of nowhere. It built on a series of escalating measures that started with the People's Bank of China China’s central bank, the primary regulator of financial stability issuing a December 2013 notice warning banks about Bitcoin risks. That year, the PBOC barred financial institutions from providing any services related to virtual currencies.

• April 2014: The central bank ordered the closure of all Bitcoin trading accounts.
• September 2017: A sweeping ban on Initial Coin Offerings (ICOs) shut down 24 platforms overnight.
• June 2021: Mining operations were targeted for environmental reasons, prompting a mass exodus of hash power overseas.
• September 2021: The PBOC effectively banned digital tokens by prohibiting any trading or transaction activity.
• June 2025: Circular No.237 the regulatory directive that declared all crypto‑related business illegal cemented a complete prohibition, covering everything from exchanges to OTC brokers.

Each step narrowed the space for private crypto activity, culminating in the all‑encompassing ban that now defines the landscape.

What the June 2025 Ban Actually Says

Under Circular No.237 the legal instrument that classifies all cryptocurrency activities as illegal financial services, the following actions are expressly forbidden for Chinese residents:

1. Trading any cryptocurrency on a domestic or foreign exchange.
2. Mining Bitcoin, Ethereum, or any proof‑of‑work token.
3. Holding a private crypto address or wallet, even if it contains a token with zero market value.
4. Providing pricing, information‑intermediation, or settlement services for crypto transactions.
5. Issuing or financing tokens, including stablecoins.

Financial institutions-including the country’s biggest banks, Alipay, and WeChat Pay-must block all payment channels that could fund crypto purchases. They also have to run enhanced monitoring models that flag “abnormal transaction characteristics” associated with virtual‑currency activity.

How the Authorities Enforce the Ban

The enforcement apparatus is both legal and technological. In July 2025, police coordinated a crackdown on schemes that used Tether (USDT) a widely used stablecoin pegged to the US dollar for illicit cross‑border transfers. The operation demonstrated two key capabilities:

• Network surveillance: Regulators monitor internet traffic for VPN endpoints and known exchange APIs.
• Bank‑level interception: Payment processors are required to freeze any transfer that matches crypto‑related patterns.

At the same time, the PBOC has mandated that all banks conduct a “comprehensive investigation” of their client lists to identify hidden crypto holdings. Failure to report suspicious activity can result in hefty fines or revocation of operating licenses.

The Immediate Impact on Exchanges

Within a month of Circular No.237 being issued, more than ten major crypto exchanges announced the withdrawal of their mainland services. Those that tried to stay open resorted to pop‑up “sandbox” sites accessible only via overseas IP addresses, but even those are increasingly blocked by the Great Firewall.

Chinese users turned to VPNs and overseas “gray‑market” platforms, only to find that the PBOC’s cross‑border monitoring now extends to detecting crypto‑related traffic from foreign servers. The risk of a crackdown, which can lead to frozen bank accounts and criminal charges, has pushed most retail investors onto the sidelines.

Comparing Mainland China with Its Neighbors

The contrast is stark: while Hong Kong is positioning itself as a regional hub for tokenization and Web 3 infrastructure, mainland China is tightening the screws on any private crypto activity.

Practical Implications for Chinese Citizens

If you are a resident of mainland China, here’s what the law means for you today:

• No legal way to own crypto: Holding any private wallet can be deemed a violation.
• Bank accounts at risk: Transfers linked to exchange activity may be frozen.
• Employment consequences: Companies found facilitating crypto transactions can lose their operating license, and employees may face disciplinary action.
• Severe penalties: Fines range up to several million RMB; repeat offenders may face criminal detention.

Some citizens still attempt to use offshore entities or VPNs, but the PBOC’s “enhanced monitoring models” now flag repeated cross‑border crypto flows. The safest approach, if you must stay compliant, is to shift interest toward the state‑backed digital yuan, which the government is actively integrating into payment apps like Alipay and WeChat Pay.

Future Outlook: Digital Yuan vs. Decentralized Crypto

China’s ultimate goal is to replace private digital assets with the digital yuan the central bank digital currency (CBDC) launched by the People’s Bank of China. Pilot programs in Shanghai and Shenzhen are expanding, and the government is urging merchants to adopt e‑CNY for everyday transactions.

Analysts agree that the likelihood of a full reversal of the June 2025 ban is low. The authorities view crypto as a threat to capital controls and monetary sovereignty. Even though the ban covers private ownership, a limited “whitelisting” path for state‑approved digital‑asset projects may emerge, but only under strict supervision.

For now, the message is clear: private cryptocurrency activity is off‑limits, and the enforcement machinery is both sophisticated and unforgiving. If you want to stay in the crypto space, the only viable route is through legally sanctioned channels-primarily the digital yuan or, for those willing to relocate, jurisdictions like Hong Kong that still permit regulated crypto business.

Quick Checklist for Residents

1. Close any crypto exchange accounts you still have.
2. Delete private wallets and stop using VPNs for crypto purposes.
3. Switch to the digital yuan for digital payments.
4. Monitor bank statements for any unexpected freezes.
5. Stay informed about any policy tweaks from the PBOC.