Summary
Although China’s approach to cryptocurrencies has changed over time, the main objectives have remained constant. Maintaining financial stability, maintaining capital control, strengthening monetary sovereignty, and ensuring state oversight are among these objectives.
In this framework, market activities were relatively tolerated between 2009 and 2013, restrictions were imposed on banking transactions, ICOs and local crypto exchanges were banned in 2017, and comprehensive bans on mining and all crypto transactions were implemented in 2021. Despite these bans, the Chinese government has continued to take strategic steps. The most important of these steps has been the development of e-CNY, the digital currency of the Central Bank of China. In the 2024-2025 period, regulators started to evaluate stablecoins and yuan-based digital instruments in a limited framework. This does not indicate a relaxation of bans, but rather a strategic and controlled adaptation process.
China’s Crypto Policies in the Historical Process
First Period (2009-2013)
During the early adoption period of cryptoassets, Chinese investors quickly entered the market and local exchanges and OTC transactions began to flourish. However, the People’s Bank of China (PBoC) and regulators have warned that crypto assets are not money and may pose a risk to the banking system.
First Restrictions and ICO Ban (2013-2017)
In 2013, the PBoC ordered banks to stop crypto transactions, and in 2017, ICOs and local exchanges were banned. Protecting investors, combating fraud and reducing systemic risks were the main justifications for these bans.
Mining and Energy Focused Measures (2019-2021)
As of 2019, China has increased restrictions on crypto mining as it continues its centralized digital currency efforts. In 2021, citing energy consumption and carbon emission targets, mining activities were severely restricted, with many facilities closed or relocated abroad.
- Comprehensive Ban (2021)
In September 2021, China declared all crypto transactions illegal; spot, derivative and OTC activities were banned. The rationale for this step was explained as maintaining financial stability, preventing money laundering, preventing capital flight and protecting consumers.
- e-CNY and Controlled Digitalization (2022-2025)
Despite comprehensive bans, China accelerated the digital yuan development process during this period and started to evaluate stablecoins and yuan-based digital assets in a limited, regulated framework in 2024-2025. This situation shows that the prohibitionist policy has not been abandoned; a controlled digitalization strategy centered on e-CNY is being pursued.
China’s Approach to Cryptocurrencies
While China’s approach to cryptocurrencies has positive consequences for the state in terms of maintaining financial stability, maintaining capital control and strengthening monetary sovereignty, it leads to the contraction of private crypto ecosystems in terms of market and innovation, capital and projects being directed abroad, and investors facing more limited options and lower return potential. China’s approach therefore represents a strategic gain for the state and a loss of innovation for the market.
Reasons for China’s Policy Shifts
- Financial Stability: The volatility and speculative nature of crypto assets create systemic risk.
- Capital Controls: The risk that cryptoassets weaken the exchange control regime by facilitating capital outflows.
- Money Laundering and Fraud: The need for investor protection due to increased fraud in ICOs and decentralized platforms.
- Energy and Environmental Concerns: High energy consumption, conflicting with China’s carbon neutrality goals.
- Geopolitical Competition: The digital yuan project is seen as a strategic element to strengthen China’s global monetary policy tools.
China’s Leading Crypto Projects
- NEO: Known as the “Ethereum of China”, NEO focuses on smart contracts and the dApp ecosystem.
- VeChain (VET): Developed for supply chain and enterprise solutions, VET stands out in logistics and product tracking.
- Conflux (CFX): One of the few blockchain projects to receive official support from the Chinese government and offers Layer-1 infrastructure.
- Ontology (ONT): Focuses on authentication and enterprise blockchain solutions.
End of 2025 Expectations by Projects
- NEO: The ecosystem is expected to be renewed with Neo X and anti-MEV features. These developments could make NEO more competitive in markets outside China.
- VeChain (VET): ESG applications, supply chain integrations and Stargate updates have the potential for growth in enterprise use.
- Conflux (CFX): Could reach a more institutional profile with Stablecoin integration and RWA (Real Word Assets) tokenization.
- Ontology (ONT): Web3 is expected to play an important role in the identity and data economy.
Conclusion and Evaluation
While limiting private crypto markets with sweeping bans, China has embraced digitalization as a strategic tool through the state-controlled digital currency e-CNY. By 2025, the trend is not a complete lifting of bans, but a controlled, strategic and gradual adaptation process. In this framework, the limited and regulated introduction of stablecoins and yuan-based digital instruments reflects China’s will to shape the digital financial architecture in line with its own interests.
Disclaimer
The information provided in this article is for educational and informational purposes only and should not be construed as financial, investment, or legal advice. While every effort has been made to ensure accuracy, the cryptocurrency market and regulatory policies—particularly in jurisdictions such as China—are subject to rapid changes. Readers should conduct their own research and, if necessary, consult with a licensed financial or legal professional before making any investment or business decisions related to digital assets.
