Chinese authorities are intensifying enforcement of cryptocurrency prohibitions following a surge in speculative trading, with the People's Bank of China warning that all virtual currency activities remain illegal despite years of comprehensive restrictions.
The PBOC convened a high-level coordination meeting November 28 with 13 government agencies including the Ministry of Public Security, Central Financial Commission, and Supreme People's Court to address what officials described as a resurgence in crypto speculation driven by global price increases and social media influence.
"Virtual currencies do not hold the same legal status as fiat currency and cannot be used as legal tender in the market," the central bank stated, emphasizing that "virtual currency-related business activities are illegal financial activities."
The coordinated enforcement action comes as an estimated 59 million Chinese users continue accessing cryptocurrency despite mainland restrictions, representing roughly 8-10% of global crypto participants. The persistent demand underscores the challenge Beijing faces in fully eliminating interest in digital assets, even with comprehensive technical and legal barriers in place.
What Happened
The PBOC's latest warning places particular emphasis on stablecoins, which authorities identified as posing heightened risks for illegal activity. The central bank stated that stablecoins "currently cannot effectively meet requirements for customer identification and anti-money-laundering," making them vulnerable to exploitation for fundraising fraud and unauthorized cross-border fund transfers.
The statement from Chinese media outlet Caixin noted that crypto speculation has "resurfaced" in recent months, prompting the coordinated government response. Officials instructed relevant departments to "deepen coordination and cooperation" while enhancing monitoring capabilities to "severely crack down on illegal and criminal activities."
China's renewed focus comes despite maintaining the world's most restrictive cryptocurrency policies since 2021. That year, Beijing published comprehensive notices preventing virtual currency speculation and banned mining operations, forcing the once-dominant domestic mining industry offshore. At the time, PBOC officials claimed the measures "rectified the chaos in the virtual currency market, achieving significant results."
However, enforcement gaps have enabled underground activity to persist. Reuters reported in November that Bitcoin mining has quietly staged a comeback in China, with the country now accounting for approximately 14% of global hashrate as of October 2025, making it the third-largest mining jurisdiction after the United States and Kazakhstan.
The resurgence stems from surplus electricity capacity in energy-rich provinces like Xinjiang and Sichuan, where excess power from coal and hydroelectric sources cannot be efficiently transmitted to coastal cities. Mining rig manufacturer Canaan reported that China represented only 2.8% of its revenue in 2022 but surged to over 50% in the second quarter of 2025, indicating substantial underground operations.
Chinese authorities employ multiple enforcement mechanisms to restrict crypto access. The national firewall blocks foreign exchange websites, while domestic app stores flag offshore platform applications as high-risk. Banks and payment institutions face strict prohibitions on processing crypto-linked transactions, and social media platforms including Douyin and Xiaohongshu actively remove investment-related and crypto-promotional content.
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Why It Matters
Beijing's intensified crackdown reflects growing concerns that cryptocurrency activity threatens financial stability and capital control measures, despite four years of comprehensive prohibitions. The persistence of 59 million users demonstrates that regulatory restrictions have driven activity underground rather than eliminating it entirely.
The focus on stablecoins marks a strategic shift in enforcement priorities. These dollar-pegged tokens enable users to circumvent capital controls while avoiding the volatility of traditional cryptocurrencies, making them particularly attractive for cross-border transactions. PBOC Governor Pan Gongsheng previously stated in October that the central bank would "closely track and dynamically evaluate the development of overseas stablecoins," signaling heightened regulatory attention to these instruments.
The timing of the crackdown coincides with Hong Kong's development of a stablecoin licensing framework, which took effect in August 2025. The divergent approaches between Hong Kong's innovation-friendly stance and mainland China's prohibitions create a fragmented regulatory landscape within Greater China, with 26% of ETF investors in the region planning to allocate to cryptocurrency ETFs in 2025 according to recent data.
China's crackdown occurs against the backdrop of its digital yuan expansion. The e-CNY central bank digital currency served over 261 million users and processed $13.8 billion in transactions through 2025, offering authorities a state-controlled alternative to decentralized cryptocurrencies with built-in surveillance capabilities.
For global crypto markets, China's renewed enforcement underscores the persistence of regulatory fragmentation despite growing mainstream adoption elsewhere. While jurisdictions including the United States, European Union, and Hong Kong develop frameworks to accommodate digital assets, Beijing maintains its comprehensive ban, viewing cryptocurrencies as fundamentally incompatible with centralized financial control.
The PBOC called on participating agencies to "monitor capital flows, bolster information sharing networks, further enhance monitoring capabilities" to intensify enforcement. However, the continued operation of underground mining and persistent user demand via VPNs and offshore platforms suggests that technical and legal barriers alone cannot fully eliminate cryptocurrency activity when economic incentives remain strong.
Industry observers note that China's strict stance has not prevented technological experimentation. Over 100 Chinese enterprises now offer blockchain applications in sectors including healthcare, identity verification, and logistics, indicating that authorities distinguish between permissioned blockchain technology and permissionless cryptocurrencies.
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