False Alarm: China Has Not Introduced New Cryptocurrency Ban, 2021 Rules Still in Effect

False Alarm Over China Crypto Ban Sparks Market Jitters Then Rebounds

Fresh speculation claiming China had reimposed a full ban on cryptocurrency activity triggered a wave of confusion across social media this week, despite no official announcement from Beijing.

The rumour, which originated from a prediction platform post on 3 August 2025, briefly rattled the markets before being debunked by experts and Chinese industry insiders.

No New Restrictions Issued, Say Authorities And Industry Sources

According to sources close to Chinese regulators, no new policies or directives have been issued regarding cryptocurrency trading or mining.

The existing framework, implemented in 2021, remains the most recent update from the Chinese government.

It prohibits institutions and companies from providing crypto-related services but does not ban individual ownership or private peer-to-peer transactions.

Despite initial panic, digital assets like Bitcoin recovered swiftly once clarification emerged.

As of writing, Bitcoin trades at $114,701, up 1.1% in the last 24 hours, with a market capitalisation of $2.28 trillion.

Trading volume, however, dipped by 17% over the same period, indicating short-term cautious behaviour among investors.

Kalshi’s Post Fuels Panic Amid Wider Market Sensitivities

The rumour gained traction after Kalshi, a prediction market platform, posted that China had reintroduced a ban due to concerns about capital flight and environmental impacts.

The post, though lacking evidence, went viral, sparking reactions across the crypto world.

Three Arrows Capital co-founder Su Zhu promptly dismissed the claim, stating there was "zero evidence" from any Chinese source indicating a new crypto ban.

Meanwhile, prominent Chinese crypto journalist Colin Wu also confirmed that the rumours were spreading “without any evidence”.

Regulatory Landscape Unchanged Since 2021 Crackdown

China’s current stance on cryptocurrency remains based on sweeping restrictions introduced in 2021.

These measures forced domestic exchanges to shut down and banned institutional crypto services, while also targeting mining operations, particularly in provinces like Sichuan and Inner Mongolia.

However, individual transactions have not been criminalised, and activity persists underground, especially in regions with cheap electricity.

In fact, China still accounts for around 21% of the global Bitcoin mining hashrate, despite the 2021 ban.

Source: World Population Review

Hong Kong Carves Its Own Path With Pro-Crypto Rules

While mainland China maintains a tight grip on the sector, Hong Kong has adopted a different strategy.

Operating under its own legal and financial system, the city introduced a licensing regime for spot crypto trading platforms in June 2025.

This move aims to attract global blockchain projects and position Hong Kong as a competitive hub for digital finance in Asia.

The contrast between Hong Kong’s approach and the mainland’s restrictions has fuelled speculation that China could eventually adopt a more nuanced policy — especially as regulators continue to pilot projects involving tokenised real-world assets and regulated stablecoins in regions like Shanghai and Guangdong.

Crypto Ownership Remains Legal, But Misinformation Persists

Despite repeated clarifications, the spread of false information remains a challenge.

The idea that China has “banned crypto again” continues to resurface whenever there are financial policy shifts or environmental concerns raised by officials.

While current laws prohibit companies and banks from offering crypto services, personal use is not forbidden.

A Fine Line Between Control And Innovation

China’s approach to crypto highlights a delicate balance — asserting financial control while cautiously embracing blockchain-based innovation.

The country's continued exploration of stablecoins and tokenised assets, coupled with Hong Kong’s pro-crypto push, suggests digital finance is far from abandoned in China.

Rather than a blanket rejection, Beijing’s focus remains fixed on regulation, oversight and strategic integration.