1. From Crypto Cracks to Digital Dominance
China was once a global crypto powerhouse—thanks to early adoption in Bitcoin mining and trading. But starting in 2017, the government began systematically banning ICOs, exchanges, and mining over concerns about financial stability and environmental impact. By 2021, all forms of crypto trading and speculative activities were effectively outlawed.
Yet paradoxically, the state embraced blockchain and launched its own digital currency—the e-CNY (digital yuan)—as a means to modernize and centralize its financial system.
2. Surveillance Meets Spending: The Power of e-CNY
China’s digital yuan—now widely used in cities like Changshu and Beijing—runs through a “controlled anonymity” model: small transactions remain private, while larger ones are fully traceable. This dual structure reinforces anti-corruption efforts and political oversight.
The CBDC rollout spans everything from public transit fare to income payments. It also supports offline NFC or Bluetooth payments—showcasing both functionality and total state oversight.
3. Revived Engagement—Through a Controlled Lens
China remains unmoved on crypto asset bans but is gradually leveraging blockchain in secure, state-sanctioned ways. Projects like the Blockchain Service Network (BSN) and national data infrastructure initiatives are among the key drivers in this shift.
Moreover, China’s central bank is exploring yuan-backed stablecoins—particularly via Hong Kong’s newly enacted licensing framework—aimed at extending renminbi use internationally.
4. Legal Nuance: Property Rights, Not Permitted Trade
In a significant legal decree, the Shanghai High Court recognized cryptocurrencies as personal property. This ruling provides individuals the right to own crypto while reaffirming that commercial activities—such as token issuance or exchange trading—remain explicitly banned.
5. Warning Against Sensitive Innovation—Worldcoin in Focus
China’s Ministry of State Security has issued explicit warnings against crypto projects that collect biometric data, such as iris scans, citing national security concerns. This directly targets privacy-invasive platforms like Worldcoin and underscores the government's tightening guard over personal data.
6. The Economic & Geopolitical Implications
China’s Approach Strategy Focus
Ban Decentralized Crypto Prevent financial instability and capital flight
Develop CBDC & Blockchain Infrastructure Enhance state surveillance, transparency, and control
Explore Stablecoins via Hong Kong Internationalize the renminbi and challenge dollar dominance
Legalize Private Holding, Prohibit Speculative Use Tight regulatory clarity with individual recognition
Control Biometric-Based Projects National security over privacy-lax innovation
Final Insights
China’s approach to digital currencies is strategic and deeply centralized. While decentralized crypto remains restricted, China is aggressively building its own sovereign digital infrastructure—spanning domestic surveillance, economic control, and cross-border modernization of the yuan.
By differentiating between decentralization (rejected) and institutional innovation (embraced), China is defining a new paradigm: digital modernization under total regulatory oversight.