China Reaffirms Strict Ban on Crypto Payments Even as Digital Assets Remain Legal Property

• PBOC reaffirms that virtual-asset payments and stablecoins remain illegal.
• Underground Chinese miners now generate an estimated 14–20% of the global Bitcoin hashrate.

China’s central bank reiterated its position on virtual assets this week. The People’s Bank of China said cryptocurrencies, including stablecoins, are not legal tender. It also said related financial activities remain illegal in mainland China because of compliance and cross-border risk concerns.

The statement followed a Nov. 26 meeting, during which the PBOC reviewed market risks associated with crypto payments and token transfers. The bank linked virtual assets to challenges in identity verification and financial monitoring. It cited risks around anti-money-laundering enforcement, fraud prevention, and cross-border fund movement that bypass state controls.

First, the PBOC said stablecoins do not meet mainland compliance standards for payment tools, in contrast with our earlier report that China is preparing to launch a stablecoin in Hong Kong. It underscored that tokens pegged to foreign currencies or backed by algorithmic systems lack verifiable user identification on public distributed ledgers. It stated that unregistered exchanges, payment channels, and custody services are banned when they support conversion, clearing, or settlement of virtual currencies.

Second, the bank turned to cross-border money risks. It said offshore crypto trading can open illegal channels for moving funds out of China and add stress to local markets. Officials also warned that flows through foreign wallets or decentralized platforms can help capital leave the country in secret. Any mining or related business on Chinese soil, they said, must follow strict licensing and registration rules, and hidden operations are banned.

Meanwhile, regulators repeated that banks and payment firms must not serve crypto businesses. Lenders cannot route, clear, or settle transfers linked to tokens in yuan or foreign currencies. As stablecoin use grows abroad, China is keeping a zero-tolerance line on virtual-asset payments at home, saying the policy protects its currency and financial system.

China Back in Bitcoin Mining’s Top Tier After 2021 Ban

Meanwhile, Chinese miners have returned to global Bitcoin mining rankings, even after Beijing’s 2021 ban on the industry. As we discussed earlier, China now delivers about 14–20% of the world’s Bitcoin hashrate. That share puts the country behind only the United States.

During the 2021 crackdown, authorities closed large mining farms. The national hashrate briefly dropped close to zero. Many mining operators packed up and moved machines abroad, mainly into Kazakhstan, Russia, and the U.S. Still, network data started showing mining activity from China ticking back up within a year.

This time, mining works differently. Operators run farms underground, avoiding publicity. Most of the activity clusters are in regions with low power costs, especially Xinjiang and Sichuan, where hydropower creates periods of excess electricity.