China Reaffirms Crypto Has “No Legal Status”, Renews Crackdown on Crypto Payments and Stablecoins

Contrary to netizens’ expectations about a potential policy softening, the People’s Bank of China (PBOC) has reaffirmed its strict stance on cryptocurrencies, reiterating that virtual assets are not considered legal tender and are excluded from the country’s financial system. This move marks a renewed crackdown on cryptocurrency payments and growing stablecoin adoption and can be attributed to the government’s disdain for speculative assets and concern for financial stability.

The meeting, held on Friday, November 28, was attended by prominent figures from the Ministry of Public Security, the Cyberspace Administration of China, as well as the Central Financial Stability and Development Office and the Supreme People’s Court. The gathering noted that trading activity, particularly Bitcoin mining, has quietly resurged in Chinese provinces and stricter compliance measures are expected to be enforced to eliminate violations.

Despite the rapid institutionalization of digital assets in neighbouring States like Hong Kong and the West (U.S., U.K., Germany, France, etc), Beijing remains immovable. Hence, this latest directive serves as a stark reality check and a clear warning that the 2021 ban was not a temporary measure.

2021 Crypto Ban Remains as PBOC Warns Against Trading Activity

China has spent the past decade intensifying its crackdown on the crypto sector, beginning with the nationwide ban on initial coin offerings (ICOs) in 2017 and the 2019 classification of crypto to fiat off ramp as illegal. By 2021, the government implemented a sweeping ban on crypto mining and exchange operations. Four years later, in 2025, these rules remain firmly in place.

“Virtual currencies do not hold the same legal status as fiat currency and cannot be used as legal tender in the market”, the PBOC stated emphatically, adding that virtual currency-related business activities are “illegal financial activities”.

The regulator also noted that rising global crypto prices have fueled renewed speculation in China, creating new risks, alongside a surge in scams and illicit dealings.

The regulator also warned that the recent uptick in global crypto prices has led to a resurgence in speculation within China and calls for tighter risk controls. Likewise, it believes the market is now infiltrated with scams and illicit activities, creating new risks to users.

As a result, the zero-tolerance policy is now reinforced by a renewed law enforcement mandate to identify and dismantle the infrastructure enabling Chinese citizens to access these prohibited markets

Bitcoin Mining On the Rise in China

Earlier reports by Reuters and data from the Hashrate index revealed that China controlled approximately 14% of the global Bitcoin mining Hashrate by late October 2025. This resurgence essentially ranks China as the third-largest mining hub in the world after the United States and Russia.

More recently, a Singapore-based mining rig also reported that sales to China accounted for over 50% of its revenue in the second quarter of 2025, up from only 2.8% in 2022.

This resurgence appears driven by a mix of economic necessity and covert adaptability, with underground mining operations reportedly flourishing in energy-efficient provinces such as Xinjiang and Sichuan.

However, the government views this activity unfavorably, and some analysts suggest that the resurgence may have prompted the PBOC’s recent restatement of the 2021 crypto ban. Stricter systems are now expected to monitor money flows and flag suspicious crypto wallet transactions.

Authorities Target Stablecoins and Covert Payments

If there is anything that distinguishes this 2025 crackdown from previous iterations, it is the specific, aggressive focus on stablecoins (USDT, USDC). For years, stablecoins have served as the unofficial conduit for Chinese investors who wish to bypass capital controls and move wealth abroad. However, the PBOC has now identified this as a critical systemic risk.

Authorities warn that stablecoins are increasingly being leveraged for money laundering, capital flight and underground banking. This aligns perfectly with the picture already painted by the Supreme People’s Court about virtual assets during its revision of the anti-money laundering (AML) law.

The announcement suggests that unapproved stablecoin transactions may now be flagged as criminal offences rather than a mere regulatory infraction.

Is this A Huge Win For the Digital Yuan?

China’s renewed crackdown on cryptocurrencies and stablecoins coincides with its push to adopt the digital Yuan (e-CNY), its central bank coin that allows for centralized financial control. To improve widespread adoption, the PBOC considers unregulated cryptocurrencies and stablecoins as dangerous threats.

Furthermore, this crackdown highlights the widening regulatory gap between mainland China and Hong Kong. While the latter is actively issuing licenses to crypto exchanges and developing a stablecoin regulatory landscape to attract Web3 capital, Beijing has decided to tighten its financial controls.

Conclusion

China’s latest announcement is a sobering reminder that the world’s second-largest economy may never join the global crypto pivot. It’s a reaffirmation that crypto has “no legal status” and its sharp focus on stablecoins highlights Beijing’s commitment to containment and strict financial control. The rationale remains consistent: heightened speculation, capital-flight risks, and the inability of stablecoins to meet customer identification and anti-money-laundering standards.

This statement also sends a clear message to global markets, especially to investors who had hoped for a policy softening after recent reports of rising Bitcoin mining activity in China. While the PBOC recognizes the technological relevance of digital assets, its emphasis lies in advancing the e-CNY, a fully centralized alternative that preserves state oversight.

In the short term, Asian markets may experience a dip in trading activity as investors react to the renewed criminalization of crypto transactions. Mining operations in certain provinces could also face disruption, triggering another wave of global miner redistribution similar to 2020. Yet, despite regulatory pressure, Chinese investors have historically shown resilience through VPNs, DEXs, and OTC channels.

For international traders and crypto users seeking compliant, secure access to digital assets, platforms like Digitap provide a regulated environment to buy, sell, and manage crypto without relying on risky underground channels. While China tightens restrictions, global users can still participate confidently in the broader crypto economy through trusted, legally compliant services.