Is crypto legal in China? Rules & regulation (2026)

Legal framework

PBOC-led Notice No. 42 [2026] (Yin Fa [2026] No. 42) — Notice on Further Preventing and Handling the Risks of Virtual Currency Trading and Real-World Asset Tokenization Speculation, jointly issued 6 Feb 2026 by the People's Bank of China, NDRC, MIIT, MPS, SAMR, NFRA, CSRC and SAFE — superseding the 24 Sep 2021 ten-agency notice. The Renminbi Law and the e-CNY regime designate the digital yuan as the sole legal digital currency on the mainland.

Status by sub-area

• Stablecoins

  In force

  Stablecoin issuance, distribution and use in mainland China are prohibited. PBOC Notice No. 42 (Feb 2026) explicitly extended the ban to RMB-pegged and other stablecoins, and PBOC officials have reaffirmed that stablecoin business activity is 'illegal financial activity'. Hong Kong's separate Stablecoins Ordinance does not apply on the mainland.

• Exchanges / VASP

  In force

  No licensing regime for crypto exchanges or VASPs exists on the mainland. The 2021 PBOC ten-agency notice made operating an exchange, running matching services, acting as central counterparty and providing crypto derivatives 'illegal financial activities'; overseas exchanges serving Chinese residents online, and their PRC-based staff and support providers, are also unlawful.

• Token Offerings

  In force

  Token sales are prohibited. The PBOC-led 2017 ICO ban categorized initial coin offerings as unauthorized public financing; the 2021 notice reaffirmed the ban; and the 2026 Notice No. 42 extends the prohibition to tokenized real-world assets absent explicit regulatory consent on approved financial infrastructure.

• Custody

  None

  There is no qualified-custodian or safeguarding regime for client crypto on the mainland because providing crypto services is itself unlawful. Courts recognize personal holdings as 'virtual property' entitled to civil protection, but no permissible commercial custody framework exists.

  Still pending: No permissible commercial custody framework; regulatory route unclear

• DeFi

  In force

  DeFi activity is prohibited on the mainland. There is no dedicated DeFi framework, but decentralized exchange, lending, staking and derivative protocols fall within the broad prohibition on 'virtual currency' business activity under the 2021 notice and the 2026 Notice No. 42. Enforcement targets domestic operators, service providers and intermediaries.

• Tax

  Partial

  China has no dedicated crypto-tax statute. In practice the State Taxation Administration applies existing Individual Income Tax categories to gains from crypto held as 'virtual commodities' — typically treating disposals as property-transfer income at 20% or as business/operating income (progressive up to 45% for individuals; 25% enterprise income tax). A 2025 Shanghai STA explainer on digital-currency taxation drew attention but did not create a permissive regime.

  Still pending: Dedicated crypto-tax statute pending; STA guidance incomplete, rates by classification

Key points: crypto & digital assets in China

1. 01Comprehensive prohibition (2021 notice)

   The 24 September 2021 PBOC-led ten-agency Circular on Further Preventing and Handling the Risks of Speculation in Virtual Currency Trading classifies all crypto-related business — trading, brokerage, ICOs, derivatives, order-matching and services by overseas exchanges to PRC residents — as illegal financial activities; financial institutions and payment providers are barred from any related service.

   loc.gov law.asia

2. 022026 extension to stablecoins and RWA tokenization

   PBOC Notice No. 42 (Yin Fa [2026] No. 42), issued 6 February 2026 by the PBOC and seven other central agencies, expressly extends the crypto prohibition to offshore/onshore stablecoins (including RMB-pegged) and to real-world-asset (RWA) tokenization unless carried out on approved financial infrastructure with explicit regulatory consent.

   pymnts.com coindesk.com cryptoslate.com

3. 03e-CNY as the only legal digital currency

   The digital yuan (e-CNY) is legal tender with the same status as physical RMB and, from 1 January 2026, is repositioned by the PBOC from 'digital cash' to 'digital deposits' with commercial banks permitted to pay interest on e-CNY holdings — reinforcing the state's monopoly over digital money on the mainland.

   theblock.co beincrypto.com en.wikipedia.org

4. 04Personal ownership treated as 'virtual property'

   Chinese courts (including a widely cited Shanghai Songjiang People's Court ruling and the Supreme People's Court's 2025 'Digital Rule of Law' journal) recognize that individuals may lawfully hold cryptocurrencies as virtual property with civil-law protection, while all commercial and financial activity in crypto remains prohibited.

   coingeek.com mexc.co cryptoslate.com

5. 05Hong Kong SAR is a separate regime

   Under 'One Country, Two Systems', Hong Kong's Stablecoins Ordinance (in force 1 August 2025, administered by the HKMA) licenses fiat-referenced stablecoin issuers with HK$25m minimum capital and 100% reserve backing; this framework does not extend to mainland China, where issuance and use remain prohibited.

   hkma.gov.hk freshfields.com law.asia

6. 06Tax treatment is unsettled but authorities pursue gains

   There is no dedicated crypto-tax statute; the State Taxation Administration (STA) applies existing Individual Income Tax categories — treating crypto disposals broadly as gains from 'property transfer' (20% flat) or as business/operating income (up to 45% for individuals; 25% enterprise income tax) — while SAFE monitors related cross-border flows. A 2025 Shanghai STA explainer triggered speculation of policy easing but no permissive regime has been enacted.

   vezgo.com finance.yahoo.com ainvest.com

Timeline of decisions

1. 22 Oct 2026Law
   China seeks to seize 61,800 BTC tied to $5.7 billion fraud scheme

   CoinDesk Policy

2. 19 Aug 2026Decision
   China triples its e-CNY network in 2026 as 8 more banks join the CBDC push this week

   CoinDesk Policy

3. 28 Nov 2025Guidance
   PBOC reaffirms total crypto ban and outlaws yuan stablecoins

   At a coordination meeting of 13 agencies, the PBOC declared a 'resurgence' of crypto speculation and reaffirmed that all virtual-currency activity, including yuan-pegged stablecoins issued offshore without approval, is illegal, prompting Ant Group and JD.com to halt Hong Kong stablecoin plans. It marks China's strongest public stance since the 2021 ban and consolidates a state monopoly via the digital yuan.

   Central Banking

4. 1 Nov 2024Decision
   Shanghai court: holding crypto as personal property is not illegal

   The Songjiang District People's Court stated that virtual currency has 'property attributes' and that simply holding it is lawful for individuals, the first clear judicial statement on personal ownership, while reaffirming that token issuance, fundraising, and crypto business activities remain illegal financial activities.

   South China Morning Post

5. 1 Jan 2022Law · official
   Crypto mining added to industrial 'eliminate' blacklist

   The NDRC's revised Industrial Structure Adjustment Guidance Catalogue took effect, formally listing 'virtual currency mining' among activities to be phased out, cementing the prohibition begun in 2021 as part of carbon-neutrality goals.

   Library of Congress

6. 24 Sept 2021Guidance · official
   PBOC and nine agencies declare all crypto transactions illegal

   The 'Circular on Further Preventing and Disposing of Speculative Risks in Virtual Currency Trading,' issued by the PBOC with the Supreme People's Court, Supreme People's Procuratorate, Ministry of Public Security and others, deemed all crypto-related business, trading, matching, derivatives, and services by offshore exchanges to mainland residents, illegal financial activity subject to criminal liability. It is the foundation of today's blanket ban.

   People's Bank of China

7. 21 May 2021Guidance
   State Council Financial Stability Committee vows mining and trading crackdown

   The 51st meeting of the State Council's Financial Stability and Development Committee announced a crackdown on bitcoin mining and trading, signaling the escalation that culminated in the September 2021 bans.

   CoinDesk

8. 1 Oct 2020Guidance
   Digital yuan (e-CNY) public pilot begins

   After trials launched in mid-2020 in Shenzhen, Suzhou, Chengdu and Xiong'an, the PBOC ran a Shenzhen lottery distributing RMB 10 million in digital yuan to 50,000 citizens, advancing the state-controlled CBDC positioned as the official alternative to private crypto.

   South China Morning Post

9. 15 Sept 2017Enforcement · official
   Exchanges ordered to shut domestic crypto trading

   Regulators issued Virtual Currency Exchange Cleanup requirements forcing all bitcoin/crypto trading platforms to halt new registrations and wind down trading services; major venues like BTCC closed, and yuan's share of global bitcoin trading collapsed from over 90% to under 1%.

   Library of Congress

Sources

1. 1.loc.gov/item/global-legal-monitor/2021-10-13/china-central-bank-issues-new-re
2. 2.law.asia/pboc-virtual-currencies/
3. 3.pymnts.com/cryptocurrency/2026/china-extends-crypto-ban-to-stablecoins-and-token
4. 4.coindesk.com/policy/2026/02/06/china-expands-crypto-crackdown-to-stablecoins-asset
5. 5.cryptoslate.com/crypto-laws/china-pboc-virtual-currency-rwa-notice-no-42-2026/
6. 6.centralbanking.com/central-banks/currency/digital-currencies/7974333/pboc-emphasises-sta
7. 7.hkma.gov.hk/eng/news-and-media/press-releases/2025/07/20250729-4/
8. 8.law.asia/hong-kong-stablecoin-rules-mainland-china/
9. 9.coingeek.com/digital-asset-ownership-legal-in-china-shanghai-judge/
10. 10.cryptoslate.com/crypto-clarified-as-personal-property-in-china-remains-barred-for-bus
11. 11.vezgo.com/blog/china-crypto-tax-guide/
12. 12.en.wikipedia.org/wiki/Digital_renminbi
13. 13.theblock.co/post/383824/china-interest-digital-yuan
14. 14.beincrypto.com/china-digital-yuan-interest-ban-crypto-2026/
15. 15.mexc.co/news/370605
16. 16.freshfields.com/en/our-thinking/briefings/2025/09/hong-kong-stablecoins-ordinance-ove
17. 17.finance.yahoo.com/news/shanghai-explainer-taxation-digital-currency-093000727.html
18. 18.ainvest.com/news/china-taxes-crypto-gains-45-trading-ban-2504/