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China banned Cryptocurrency mainly to protect financial stability and keep control over the monetary system.
Bitcoin and Crypto Trading were declared illegal in 2021, with even stricter rules introduced in 2026.
The government wants to protect the Chinese Yuan and prevent crime linked to Crypto activities.
China’s ban on cryptocurrency did not happen suddenly. It was the result of years of regulatory concern about financial risk, illegal activity, and control over money. The main reason behind the ban is simple: the government wanted to protect financial stability and keep full control over the country’s monetary system. Over time, officials believed that cryptocurrencies posed risks that were difficult to control.
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The most important reason for the ban was financial stability. Cryptocurrencies like Bitcoin are highly volatile. Prices can rise or fall very fast, sometimes within hours. Chinese regulators believe that such a price swing could cause heavy losses for ordinary investors.
In 2021, China declared all cryptocurrency transactions illegal. Trading, mining, and even providing crypto trading services were completely banned. Officials said that virtual currencies are not legal money and should not circulate in the market. They also warn that speculative trading can disrupt the economic order.
Another major reason is control. The Chinese government wants full authority over the money supply and payment systems. Cryptocurrency operates outside traditional banking systems. This means transactions can happen without central bank supervision. For a country that carefully manages capital flows and exchange rates, this is seen as a serious risk.
The country considers this situation to be a major threat as it controls capital movement and foreign exchange rates. China has developed its own cryptocurrency, which it calls the digital yuan. The central bank issues it and maintains full control over all transactions related to this asset. If people use private cryptocurrencies instead, it could weaken the effectiveness of this system.
Regulators established new rules to prevent offshore businesses from creating yuan-based stablecoins linked to the digital currency. The authorities extended their prohibition to include specific forms of asset tokenization together with digital currency marketing activities. Through these actions, the government aims to eliminate every potential means individuals can use to evade detection.
Criminal organizations use cryptocurrency to conduct their illegal operations. Law enforcement in China has found evidence that people use these assets for fraudulent activities, illegal fundraising, and money laundering.
The January 2026 report showed that worldwide crypto-related money laundering reached approximately $8.2 billion during 2025. The financial numbers create increased anxiety for regulatory authorities.
China has documented thousands of criminal investigations involving cryptocurrency transactions over the past few years. Law enforcement officials state that criminals use cryptocurrency, as it enables them to conduct confidential financial operations between different nations. Law enforcement efforts become more challenging when certain blockchain transactions make tracing activities difficult.
China held the position of being the top Bitcoin mining nation worldwide. The country maintained control over 50% of the industry until the prohibition started in 2021. The United States and Kazakhstan became the new locations for mining operations after the government enforcement actions forced them to leave.
Reports from late 2025 indicated that some mining operations had resumed their activities without drawing attention. This shows that banning crypto might send it underground. This is another reason authorities continue to strengthen enforcement.
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China banned cryptocurrency mainly to protect financial stability and maintain control over the money supply. The government does not want private digital currencies to compete with the official system. It also wants to prevent financial risks and illegal activities.
Even though cryptocurrency continues to grow worldwide, China’s position remains firm. Stability and state control are seen as more important than the potential benefits of decentralized digital assets.
1. When did China ban Cryptocurrency?
China officially declared all Cryptocurrency transactions illegal in September 2021 and has tightened restrictions further in 2026.
2. Is Bitcoin legal in China?
Bitcoin is not legal for trading or payments in mainland China. Financial institutions are also not allowed to support Crypto Trading.
3. Why is China against Crypto Trading?
Authorities believe Crypto Trading is highly risky, can cause financial instability, and may enable money laundering or illegal fundraising.
4. What is the digital yuan?
The digital yuan is China’s official central bank digital currency. It is issued and controlled by the central bank to maintain oversight of the Chinese Yuan.
5. Can people still mine Cryptocurrency in China?
Mining was banned in 2021, and although some reports suggest limited underground activity, it remains illegal under current regulations.
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