China bans crypto to promote its digital yuan. Personal holdings are now illegal, with penalties and asset seizure in place.
In a dramatic intensification of its years-long crackdown on cryptocurrencies, China has officially prohibited individual ownership of them. The move was announced by the People’s Bank of China (PBOC) on May 30, 2025, representing a notable departure from earlier policies aimed at trading platforms and mining facilities.
The new regulations, which took effect on June 1, prohibit individuals from holding assets like Bitcoin, Ethereum, and other digital tokens—a move that has stunned both domestic users and global investors.
Government Pushes for Digital Yuan Dominance
The officials report that the ban is part of a larger plan to strengthen financial sovereignty and speed up the use of the digital yuan, China’s central bank digital currency (CBDC). With more than ¥7 trillion worth of transactions already settled using the digital yuan, the government is intent on driving out competition from decentralized currencies and minimizing dependence on foreign financial networks.
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The new regulations encompass asset seizure procedures and sanctioning for non-compliance, manifesting a zero-tolerance policy towards crypto holding.
Crypto Markets Respond to Regulatory Shock
The world crypto market reacted quickly to the news. Bitcoin tumbled from $107,000 to $105,000 in a sharp drop, and altcoins such as Solana and Cardano decreased by 5.7% and 6.1%, respectively. While the sell-off was instant, analysts indicate the effect is likely to be temporary as markets get used to China’s even more aggressive approach.
The ban also creates fear of how other governments will react to the rise in influence of decentralized finance.
Loopholes Remain Even After Firm Clampdown
Despite the blanket ban, illegal crypto action in China persists. Users are using VPNs and offshore exchanges to sidestep controls, and Chinese courts continue to treat crypto as personal property in cases under their jurisdiction.
At the same time, Hong Kong is a crypto-friendly jurisdiction with regulated trading under its own licensing regime. The comparison between mainland China and Hong Kong only serves to emphasize the dual and dynamic nature of crypto regulation in the region.