Introduction
In 2025, as the global cryptocurrency market continues to develop, regulatory policies in various countries are becoming increasingly clear. As a major global economy, China's cryptocurrency regulatory policies have far-reaching implications for the global market. This editorial will focus on China's new cryptocurrency regulations, particularly its regulatory attitude towards Bitcoin and other cryptocurrencies, analyze their impact on the market, and explore possible future trends.
Historical evolution of cryptocurrency regulation in China
China's cryptocurrency regulatory policies have evolved from cautious observation to strict control. This evolution reflects the Chinese government's balancing act between financial innovation and risk prevention, and deepening understanding of cryptocurrencies like Bitcoin.
Establishment of the early regulatory framework (2013)
In December 2013, the People's Bank of China and other five ministries jointly issued the 'Notice on Preventing Risks of Bitcoin' (Yin Fa [2013] No. 289), which was the first official document regulating Bitcoin and other virtual currencies in China. The notice clearly states that Bitcoin should be regarded as a specific virtual commodity and does not have the same legal status as currency; it cannot and should not circulate as currency in the market.
The notice requires all financial institutions and payment institutions not to engage in any business related to Bitcoin, including pricing products or services in Bitcoin, buying and selling Bitcoin, acting as a central counterparty in Bitcoin transactions, underwriting insurance related to Bitcoin, or providing any other services related to Bitcoin, directly or indirectly.
The policy tone at this stage reflects the idea of 'risk isolation,' which aims to build a dam to prevent risks from transmitting to the traditional financial system without completely banning individual participation.
Strengthening of regulatory intensity (2017)
On September 4, 2017, the People's Bank of China and seven ministries jointly issued the 'Announcement on Preventing Risks of Token Issuance Financing' (referred to as the '94 Notice'), marking a stringent restriction on cryptocurrency trading and initial coin offerings (ICO) in China.
'94 Notice' clearly states that token issuance financing (ICO) is an illegally publicly funded activity without approval, suspected of illegal sale of token vouchers, illegal issuance of securities, and illegal fundraising, financial fraud, pyramid schemes, and other illegal activities, and requires all types of token issuance financing activities to cease immediately.
This policy marks a significant shift in regulatory thinking, with the focus shifting from early risk prevention to proactive and concentrated remediation of specific high-risk areas.
Comprehensive ban on trading and mining (2021)
In September 2021, ten ministries jointly issued the 'Notice on Further Preventing and Disposing of Risks from Virtual Currency Trading Speculation,' explicitly banning cryptocurrency trading and mining activities.
According to this policy, no unit or individual is allowed to engage in cryptocurrency trading and mining activities within China, nor provide services for cryptocurrency trading. Financial institutions are prohibited from providing payment settlement services for cryptocurrency trading, nor providing financing support for cryptocurrency mining.
This policy has led many cryptocurrency exchanges and miners to leave China in search of business opportunities in other countries.
Comprehensive ban on mining activities
In 2021, the National Development and Reform Commission of China categorized virtual currency mining (including Bitcoin mining) as a 'phased-out industry' and prohibited Bitcoin mining activities within the country.
This measure aims to reduce energy consumption and environmental impact but has also led to significant adjustments in the global Bitcoin mining landscape.
Main content of China's 2025 new cryptocurrency regulations
In 2025, China's new cryptocurrency regulations will mainly be reflected in the newly revised 'Anti-Money Laundering Law of the People's Republic of China' and related policy documents, which will have a profound impact on the virtual currency trading market.
Implementation of the newly revised Anti-Money Laundering Law
The newly revised Anti-Money Laundering Law will officially take effect on January 1, 2025, meaning that China's virtual currency trading market will face stricter regulation. Under the new regulations, virtual currency trading platforms, banks, and payment institutions will be required to monitor and report suspicious trading activities more rigorously, particularly with cross-border and large transactions facing stricter scrutiny, and the crackdown on money laundering will be further strengthened.
The new regulations require banks to strictly monitor and label cryptocurrency transactions, aiming to prevent capital outflows and money laundering risks, bringing cryptocurrency trading under the financial regulatory 'sky net.'
Financial opening policy issued on January 22, 2025
On January 22, 2025, five major departments including the People's Bank of China, the Ministry of Commerce, the Financial Regulatory Bureau, the China Securities Regulatory Commission, and the State Administration of Foreign Exchange issued a document clearly stating their support for residents in the Greater Bay Area to purchase qualified investment products sold by Hong Kong and Macau financial institutions through these institutions.
According to the document, the Chinese government has proposed 20 policy measures in six key areas to promote the opening and development of financial markets: allowing foreign financial institutions to provide new services; improving approval efficiency; supporting cross-border purchases of financial services; facilitating foreign investment; enhancing the cross-border flow of financial data; and strengthening financial regulation.
This policy is interpreted by the market as a potential gradual easing of China's cryptocurrency ban.
Current core restrictions on Bitcoin in China
Despite the aforementioned financial opening policies, China's core restrictions on Bitcoin and other cryptocurrencies still exist:
Trading and payment: Prohibited as a payment tool; domestic residents are not allowed to trade on domestic platforms.
Exchange operations: Domestic exchanges are prohibited from providing services to residents, except for licensed platforms in Hong Kong.
Mining activities: categorized as a 'phased-out industry,' with domestic mining banned.
Cross-border trading: The new regulations require banks to monitor and label cryptocurrency transactions to prevent capital outflows and money laundering risks.
Analysis of the impact of China's new regulations on Bitcoin
China's new cryptocurrency regulations have had multifaceted impacts on the world's largest cryptocurrency—Bitcoin. These impacts are reflected not only in the market level but also in legal and regulatory dimensions.
Legal status of Bitcoin in China
According to China's legal framework, Bitcoin is not issued by monetary authorities, does not possess monetary attributes such as legal tender and compulsion, and is not a true currency, but rather a specific virtual commodity that does not have the same legal status as currency and cannot and should not circulate as currency in the market.
Although there is no specific legislation in China targeting 'virtual currencies,' according to existing financial regulatory policies (such as the 'Notice on Preventing Risks of Token Issuance Financing' - '94 Notice' and the 'Notice on Preventing Risks of Bitcoin' - 'Document No. 289'), 'virtual currencies' are classified as financial and investment-related entities that have not been legally registered, and are prohibited from exchanging with legal currency, buying and selling, or engaging in issuance financing transactions in the financial sector.
Impact on Bitcoin trading
In China, if disputes arise from virtual currency trading, judicial authorities may not accept or recognize contracts as valid. Participation in virtual currency trading may involve illegal business operations, aiding information network crime, and if used for illegal activities such as gambling, pyramid schemes, or money laundering, severe penalties will be imposed. Losses due to platform bankruptcies, hacking attacks, etc., must be borne by the participants themselves.
However, legally held virtual assets by citizens are protected under property rights. The Supreme Court has clarified that virtual currencies have market value, and in civil scenarios involving theft, divorce property division, forced execution, etc., their value will be recognized and included in the handling scope. For example, theft of virtual currencies may lead to conviction for theft, and virtual currencies held jointly by spouses must be divided during divorce.
Impact on Bitcoin mining
China has categorized virtual currency mining (including Bitcoin mining) as a 'phased-out industry' and banned Bitcoin mining activities within the country. This measure aims to reduce energy consumption and environmental impact, but has also led to significant adjustments in the global Bitcoin mining landscape.
In 2024, China's National Development and Reform Commission revealed that it is revising the list of prohibited industry activities, which has been in place since its first publication in 2011, now newly adding cryptocurrency mining (including Bitcoin mining) to the list of projects to be phased out. Although the document does not specify the exact path and timeline for phasing out Bitcoin mining, its inclusion in the phased-out category suggests that such activities should cease immediately.
Impact of the new regulations on the market
The newly revised Anti-Money Laundering Law, which will officially take effect on January 1, 2025, will have a significant impact on the virtual currency trading market. Under the new regulations, virtual currency trading platforms, banks, and payment institutions will be required to monitor and report suspicious trading behaviors more rigorously, especially cross-border and large transactions will be subject to stricter scrutiny, and the crackdown on money laundering will be further strengthened.
The new law requires virtual currency trading platforms, banks, and payment institutions to strengthen monitoring and reporting of suspicious trading behaviors, with cross-border and large transactions facing stringent scrutiny. This will encourage the cryptocurrency trading market to undergo deep self-purification, making it difficult for criminals and non-compliant platforms engaged in money laundering and illegal fund transfers to evade detection, forcing them to exit the market. In the long term, a more regulated and healthier cryptocurrency trading ecosystem will gradually form.
International Comparison: China, the U.S., and the EU's Bitcoin Regulatory Policies
In order to fully understand the background and significance of China's new cryptocurrency regulations, it is necessary to compare them with the regulatory policies of the United States and the European Union.
U.S. cryptocurrency regulatory policies
By 2025, the U.S. attitude towards Bitcoin is becoming more open alongside regulation. U.S. regulatory agencies (SEC, CFTC) are strengthening supervision of the cryptocurrency market, focusing on combating fraud and unregistered securities issuance; the IRS has clarified tax treatment rules for cryptocurrency hard forks, airdrops, and requires exchanges to report user transaction information.
Financial institutions (such as JPMorgan, Goldman Sachs) have begun to offer Bitcoin futures, custody, and other services, with some large enterprises exploring the application of blockchain technology in cross-border payments and supply chain management.
On March 7, 2025, the Trump administration completed a historic institutional breakthrough with the 'Bitcoin Strategic Reserve Act.' By incorporating 200,000 BTC (6% of the circulating supply) seized through judicial proceedings into a permanently banned national reserve, the U.S. achieved supply-side reform for the Bitcoin market for the first time.
This policy is seen as a key move to solidify the global dominance of the dollar. The Trump administration appointed several pro-cryptocurrency officials (such as SEC Chairman Paul Atkins) and pushed the 'Stablecoin Act' (GENIUS Act), marking a shift in regulation from 'ambiguous suppression' to 'clear legislation.'
EU's cryptocurrency regulatory policies
In June 2023, the European Union officially released the 'Markets in Crypto-Assets Regulation' (MiCA), which will fully come into effect on December 30, 2024, applying to 27 EU member states and three other European Economic Area countries (Norway, Iceland, Liechtenstein). This regulation addresses the fragmentation and regulatory arbitrage issues in cryptocurrency regulation among EU and EEA countries and is the largest cryptocurrency regulatory framework globally.
In early 2025, the European Parliament will vote on the comprehensive cryptocurrency regulatory framework 'Markets in Crypto-Assets' (MiCA), which still includes a provision that may limit the energy-intensive Proof of Work (PoW) consensus mechanism.
According to the latest draft version, the relevant wording has been softened, removing the statement 'prohibiting the provision of cryptocurrency services relying on unsustainable consensus mechanisms starting from January 2025,' but still points out that cryptocurrency assets 'must comply with minimum environmental sustainability standards for the consensus mechanisms used to verify transactions before issuance, provision, or authorization for trading in the EU.'
Comparison of regulatory policies among China, the U.S., and the EU
There are significant differences in the regulatory policies for Bitcoin and other cryptocurrencies between China, the United States, and the European Union:
Regulatory attitudes: China adopts a strict regulatory and prohibitive stance, the U.S. adopts an open and regulatory parallel approach, and the EU conducts systematic regulation through the MiCA regulation.
Trading and mining: China prohibits domestic trading and mining, the U.S. allows trading but strengthens regulation, and the EU permits trading but has restrictions on high-energy consumption mechanisms.
Government involvement: China does not support and encourages the trading and circulation of Bitcoin, while the U.S. participates in the market through the Strategic Reserve Act, and the EU regulates the market through legislation.
Regulatory bodies: China is jointly regulated by multiple ministries, the U.S. is regulated by the SEC, CFTC, and other agencies, and the EU establishes a unified regulatory framework through MiCA regulations.
Economic impacts and future outlook of China's new cryptocurrency regulations
China's new cryptocurrency regulations not only affect the cryptocurrency market but also have profound implications for the entire digital economy and financial market. At the same time, these new regulations also provide new ideas for the future development of China's cryptocurrency market.
Impact on the cryptocurrency market
China's new cryptocurrency regulations have had multifaceted impacts on the cryptocurrency market:
Decline in trading volume: Due to the prohibition of domestic trading, China's cryptocurrency trading volume has significantly decreased, with many trading activities shifting to overseas platforms.
Mining industry migration: After China prohibited domestic mining, many miners have moved their operations to Kazakhstan, Russia, the United States, and other places, resulting in significant adjustments in the global mining landscape.
Increased market volatility: Strict regulatory policies have led to increased market uncertainty, resulting in greater price fluctuations for cryptocurrencies such as Bitcoin.
Increased compliance costs: Investors are required to provide detailed transaction background information, tax reporting requirements are tightening, and compliance costs are rising.
Impact on the blockchain industry
Although China has a strict attitude towards Bitcoin trading and mining, it maintains a positive attitude towards the development of blockchain technology. The Chinese government encourages the application of blockchain technology in areas such as finance, logistics, and supply chain management, and promotes innovation in these fields.
In 2025, with the maturation of technologies such as Layer 2 scaling and Zero Knowledge Proof (ZKP), China may increase investments in consortium chains and enterprise-level blockchain solutions.
Development of China's digital yuan
China is actively promoting the development of the digital yuan (e-CNY), a digital currency issued by the People's Bank of China, aimed at improving the efficiency of the payment system, reducing cash usage, and enhancing the effectiveness of monetary policy.
China has incorporated the digital yuan into the '14th Five-Year Plan for Digital Economic Development,' clarifying its strategic position as a core tool of the digital economy, with the goal of having the core industries of the digital economy account for 10% of GDP by 2025. As of July 2024, there have been a cumulative 180 million personal digital yuan wallets opened, with pilot area transaction amounts exceeding 7.3 trillion yuan, and future plans to further expand international influence.
Possible directions for future policy adjustments
Regarding the future direction of China's Bitcoin policies, there are various possibilities:
Possibility of gradual easing: There are market rumors that China may lift the cryptocurrency ban in the first quarter of 2025, especially as Hong Kong officially approved the trading of Bitcoin and Ethereum exchange-traded funds (ETFs), which may prompt mainland China to reconsider its cryptocurrency ban.
Possibility of partial easing: China may partially lift restrictions on Bitcoin, allowing trading under specific conditions while continuing to ban mining activities.
Possibility of maintaining the status quo: Considering financial risks and capital outflow concerns, China may continue to maintain its current strict regulatory policies.
Possibility of strengthened regulation: With the implementation of the Anti-Money Laundering Law, China may further enhance monitoring and regulation of cryptocurrency trading.
Conclusion
China's new cryptocurrency regulations reflect the Chinese government's cautious balance between financial innovation and risk prevention. On one hand, China adopts strict regulatory measures towards traditional cryptocurrency trading and mining activities; on the other hand, it actively develops legal digital currency and blockchain technology to promote the development of the digital economy.
China's regulatory policies towards Bitcoin and other cryptocurrencies differ significantly from those of the United States and the European Union, reflecting different attitudes and strategies regarding financial innovation, risk management, and technological development.
In the future, as technology develops and the international regulatory environment changes, China's new cryptocurrency regulations may be further adjusted and improved. Particularly in terms of promoting the digital yuan, applying blockchain technology, and establishing a cryptocurrency regulatory framework, China may have more new policies and initiatives.
In the context of globalization, China's new cryptocurrency regulations not only affect the domestic cryptocurrency market but also have profound implications for the global cryptocurrency landscape. How China promotes financial innovation and technological advancement while ensuring financial security will be a key challenge for future policy formulation and implementation.
