China Bans All Cryptocurrency Activities Effective June 1 2025

On May 30, 2025, the People’s Bank of China (PBOC) issued a comprehensive ban on all cryptocurrency activities, including trading, mining, and individual ownership. This decree, effective from June 1, 2025, outlines the suspension of crypto transactions, asset seizure measures, enforcement, and penalties. The ban marks a significant shift in China's approach to cryptocurrency, which had previously been one of the largest markets for digital tokens such as Bitcoin and Ethereum.

This latest ban is part of a series of regulatory actions taken by China over the years to control the cryptocurrency landscape. In September 2021, China effectively banned digital tokens, including Bitcoin, by prohibiting crypto trading, mining, and transactions. This was preceded by a ban on crypto mining in June 2021, citing concerns over the environmental impact and financial risks associated with cryptocurrency. Earlier, in January 2018, China cracked down on cryptocurrencies, leading miners to shift their operations overseas. In September 2017, the government banned Initial Coin Offerings (ICOs) and ordered the closure of crypto exchanges and trading platforms. The regulatory actions date back to April 2014, when the PBOC ordered the closure of Bitcoin trading accounts, and December 2013, when banks and payment institutions were banned from engaging in Bitcoin transactions. The earliest prohibition of virtual currencies was in June 2009, aimed at preventing the purchase of real-world goods with digital tokens.

The Chinese government's recent ban on cryptocurrency underscores its commitment to centralizing financial control and promoting the use of its state-backed digital currency, the yuan. The government aims to outlaw private ownership of crypto, accelerate the adoption of central bank digital currency (CBDC), mitigate financial risks related to crypto, and reassert its financial hegemony by banning decentralized crypto. This move is part of a broader strategy to maintain stability and protection within the financial system, ensuring that the digital yuan remains the primary medium of exchange.

With the implementation of the crypto ban, any discussion of crypto tax in China becomes irrelevant. The government has ceased all crypto activities and is now focusing on blockchain innovations with its digital yuan. As long as the crypto ban remains in effect, the government will not be focusing on crypto tax. Similarly, China does not have any crypto license, as Beijing has expanded its crypto ban. Since no one will be able to hold crypto or other digital assets (except its own digital yuan), a license implementation is not necessary.

Before the enforcement of the crypto ban in 2025, the adoption rate of cryptocurrency in China was fluctuating, and the market was unstable. The strict policies implemented by the Chinese government made the market sentiment rigid, influencing users to use VPNs to access foreign exchanges. This raised concerns regarding crypto, and eventually, the government banned it. The ban aims to eliminate private crypto use and centralize financial control, promoting the digital yuan as the primary medium of exchange.

Despite the comprehensive ban on cryptocurrency, the use of crypto for illicit activities remains a concern for the Chinese government. The government's focus on centralizing political power and encouraging the country’s own digital currency highlights its commitment to maintaining financial stability and control. The ban on private ownership of crypto is a significant step towards achieving these goals, ensuring that the digital yuan remains the primary medium of exchange within the country.