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China banned cryptocurrency - yet millions still trade it
China shut down crypto exchanges, blocked wallets, and fined traders. Officially, owning Bitcoin or Ethereum is illegal. But if you walk through Shanghai’s tech districts or scroll through WeChat groups in Guangzhou, you’ll find something else: people buying, selling, and holding crypto like it’s normal. In 2025, an estimated 59 million Chinese citizens still use cryptocurrency - more than in Japan, Germany, or the UK combined. How? Because bans don’t stop demand. They just push it underground.
The ban isn’t just a rule - it’s a wall
In September 2021, China made its stance crystal clear: no trading, no mining, no exchanges, no wallets. The People’s Bank of China called it a move to protect financial stability. Banks were ordered to cut off services to crypto users. Apps were scrubbed from app stores. Miners were forced to shut down rigs in Sichuan and Inner Mongolia. By 2022, the world’s largest crypto mining hub had gone silent.
But the government didn’t ban private ownership outright - it just refused to protect it. That’s the loophole. If you buy Bitcoin in China, the state won’t help you recover it if you get scammed. Your funds aren’t insured. Your contract isn’t enforceable. But you can still buy it. And millions do.
How do they do it? Offshore exchanges and encrypted P2P
Chinese users don’t use Binance or OKX from inside China anymore - those platforms left in 2021. Instead, they use VPNs. About 78% of Chinese crypto traders connect through virtual private networks to access offshore platforms like Bybit, OKX, and Gate.io. These aren’t casual users. These are people who know how to bypass the Great Firewall.
But the real story is peer-to-peer (P2P) trading. Over 63% of crypto transactions in China happen directly between individuals. WeChat and QQ are the new stock exchanges. Buyers and sellers meet in encrypted groups. They use escrow services - where a third party holds the money until the crypto is confirmed. The most popular method? Paying via Alipay or WeChat Pay, then sending USDT (Tether) directly to the buyer’s wallet. It’s fast, anonymous, and hard to trace.
One user on Zhihu, China’s version of Reddit, described the process: “I verify five things before I trade - their WeChat history, their real ID scan, their bank statement, their phone number, and a voice note saying their name.” That’s not paranoia. That’s survival.
Stablecoins are the secret weapon
Bitcoin and Ethereum are risky. But USDT? That’s the real currency in China’s crypto underground. In 2024, only 21.7% of crypto transactions used stablecoins. By mid-2025, that number jumped to 38.7%. Why? Because stablecoins act like digital cash you can send across borders without the government’s permission.
A mother in Chengdu sends money to her daughter studying in Australia. Traditional wire transfers take three days and cost 12% in fees. With USDT, it takes 15 minutes. Fees? Less than 1%. That’s not speculation - that’s survival against capital controls.
Even more telling: Chinese users are turning to stablecoins to protect savings from inflation. While the yuan holds steady, property values are falling, and local government debt is rising. For many, holding USDT isn’t about getting rich - it’s about not losing everything.
The government’s answer? The digital yuan
While cracking down on Bitcoin, China built its own digital currency: the e-CNY, or digital yuan. By the end of 2024, over 260 million personal wallets and 15.5 million business wallets were active. In the first half of 2025, the digital yuan processed 1.8 trillion yuan ($248 billion) in transactions.
It’s everywhere now: bus fares in Beijing, utility bills in Hangzhou, payroll for civil servants in Shanghai. The government controls every transaction. Every purchase is tracked. Every transfer leaves a digital fingerprint.
It’s the opposite of crypto. Crypto is anonymous. The digital yuan is surveillance. Crypto is decentralized. The digital yuan is central control. The government isn’t fighting crypto because it fears technology - it fears losing control.
Who’s using crypto? Young, tech-savvy, and desperate
It’s not random. Chinese crypto users are overwhelmingly young. The 25-34 age group makes up 37.5% of users - higher than the global average. Users over 45? Just 12.8%. That’s not coincidence. Younger people grew up with the internet. They know how to find hidden tools. They’ve seen their parents lose money in real estate. They’re looking for alternatives.
Gender? Still skewed. 89.2% of users are male - even higher than the global average of 86.9%. But the gap is closing. More women are joining, especially in cities like Shenzhen and Hangzhou, where tech culture is stronger.
And they’re not just trading. They’re building. Chinese developers created apps like “CryptoBridge” and “Silk Road Wallet” that bypass government blocks using domain fronting and encrypted tunnels. Over 8.7 million downloads happened in the first half of 2025 - all through third-party Android stores, not Google Play.
The cost of staying in the game
It’s not risk-free. In 2025, the China Cybersecurity Association reported $165 million in crypto fraud losses in just the first quarter. Scammers pose as traders, fake escrow services, and even fake government warning messages to steal funds.
Account freezes are common. A Reddit survey from r/CryptoChina found 68% of users had their bank accounts frozen after crypto activity. The average loss per freeze? 23,500 yuan ($3,250). Some lost savings. Others lost jobs - employers found out about crypto trades through bank records.
Yet 82% of those users kept trading. Half of them increased their investment in 2025 compared to 2024. Why? Because the alternative - trusting the system - feels riskier.
Is the ban cracking?
The official line hasn’t changed. In April 2025, PBoC Governor Pan Gongsheng said private crypto activity violates anti-money laundering laws and could lead to criminal charges. In July, authorities froze 1,287 bank accounts and fined $32.6 million.
But behind closed doors, things are shifting. Minutes from a July 2025 meeting of the Shanghai State-Owned Assets Supervision and Administration Commission hinted at change: “The rapid evolution of digital assets necessitates more nuanced regulatory approaches.” That’s not a policy reversal - but it’s not silence either.
Meanwhile, Hong Kong - technically part of China but with its own financial rules - has become the gateway. Seven licensed exchanges operate there. In April 2025, they handled $14.3 billion in monthly trading volume. Many Chinese traders use Hong Kong accounts to access global markets.
Analysts at Bernstein predict a 65% chance China will adopt a “controlled access” model by 2027 - like India’s 30% tax on crypto gains. Not legalization. Not freedom. But tolerance with strings attached.
What’s next? The paradox deepens
China’s crypto story isn’t about rebellion. It’s about necessity. People aren’t using crypto because they believe in decentralization. They’re using it because they need to move money, protect savings, and find opportunity outside a system that feels rigid and unresponsive.
The government’s digital yuan will keep growing. It’s efficient. It’s controllable. But it can’t replace the freedom people feel when they hold their own money - even if it’s illegal.
For now, crypto in China is a silent revolution. No protests. No headlines. Just millions of people quietly using tech to outmaneuver a ban that can’t be enforced - not at the individual level.
Is it legal to own Bitcoin in China?
No, it’s not legal to trade, mine, or operate crypto exchanges in China. The government banned all business-related crypto activities in 2021. While private ownership isn’t explicitly outlawed, it carries zero legal protection. If you’re scammed or your account is frozen, the state won’t help you recover your funds.
How do Chinese people buy crypto if exchanges are banned?
Most use offshore exchanges like Bybit or OKX through VPNs. But the majority - over 63% - trade peer-to-peer using WeChat and QQ groups. They pay via Alipay or WeChat Pay and receive USDT directly into a personal wallet. Escrow services help reduce fraud, but risks remain high.
Why are stablecoins so popular in China?
Stablecoins like USDT act as digital cash that bypasses capital controls. People use them to send money abroad - to pay for education, medical care, or family support - faster and cheaper than banks. They’re also used to protect savings from inflation and property market declines.
What’s the difference between the digital yuan and Bitcoin?
The digital yuan is controlled entirely by the People’s Bank of China. Every transaction is tracked. Bitcoin is decentralized - no government or bank controls it. The digital yuan is about surveillance and control. Bitcoin is about privacy and autonomy - even if it’s illegal to use.
Are Chinese crypto users getting richer?
Some are - but most aren’t. The main motivation isn’t speculation. It’s survival. People use crypto to avoid high bank fees, protect savings from economic uncertainty, or send money overseas. Profit is a bonus. Avoiding loss is the goal.
Will China ever legalize crypto?
Full legalization is unlikely. But a controlled model - like India’s 30% tax on crypto gains - is possible by 2027. The government may allow regulated trading through licensed platforms while keeping private wallets restricted. The goal won’t be freedom - it will be control.
I've talked to a few Chinese friends who trade crypto in secret. They don't do it for hype - they do it because their savings are disappearing in real estate and banks won't let them move money out. It's not rebellion. It's just keeping food on the table.
One guy told me he sends USDT to his sister in Australia every month instead of using Western Union. Saves him 10% every time. That’s not speculation. That’s life.
LOL china thinks they can ban bitcoin but people are still buying it like it's toilet paper on sale. they got their digital yuan and now everyone's like 'nah i'll take my own money thanks'. government wants to watch every dollar you spend? cool. i'll just use crypto and laugh while you cry over your surveillance dashboard.
It’s wild how human behavior just finds a way. The ban was meant to control, but instead it created this quiet, underground network of trust - people verifying IDs, voice notes, bank statements. It’s not about getting rich. It’s about having a little control when everything else feels locked down.
While the anecdotal evidence presented here is compelling, one must consider the broader macroeconomic and legal implications of decentralized finance operating in a sovereign state with strict capital controls. The Chinese government’s position is not merely ideological - it is rooted in systemic financial risk mitigation. The proliferation of unregulated peer-to-peer transactions via encrypted platforms introduces significant AML/CFT vulnerabilities, which undermines the integrity of the entire financial architecture. Furthermore, the reliance on USDT - a privately issued stablecoin with opaque reserves - constitutes a de facto parallel currency system that challenges monetary sovereignty. While individual agency is understandable, the structural instability introduced by such practices cannot be dismissed as mere "survival." It is an erosion of institutional authority that, if left unchecked, may precipitate broader capital flight and currency devaluation pressures.
The part about mothers sending money to kids abroad using USDT instead of wire transfers hit me hard. That’s not crypto bros gambling - that’s people using tech to fix a broken system. No one’s asking for permission. They’re just doing what needs to be done.
OMG I CAN’T BELIEVE PEOPLE ARE STILL DOING THIS. THE GOVERNMENT ISN’T PLAYING AROUND - THEY FREEZE BANK ACCOUNTS, THEY DESTROY LIVES. HOW ARE YOU STILL TRADING? ARE YOU STUPID? OR JUST THAT DESPERATE? I’M NOT JUDGING… OK I AM JUDGING. YOU THINK BITCOIN IS SAFE? IT’S NOT. YOU’RE GETTING SCAMMED EVERY DAY AND YOU DON’T EVEN KNOW IT.
This is exactly what happens when people forget God’s laws and chase after false idols. Bitcoin is a digital Babylon. The digital yuan? At least it’s under authority. You think you’re free because you hold your own coins? You’re just a slave to greed and deception. The Bible says, "You cannot serve both God and Mammon." And right now, half of China is serving Mammon with their eyes wide open.
Repent. Or your savings will vanish - and your soul with it.
So… the government bans crypto, builds its own ultra-tracked digital currency, and people just… go around it? Like a game of whack-a-mole but with bank accounts?
Meanwhile, the people who actually understand tech are building apps that bypass firewalls while the bureaucrats are still arguing over PDFs. The real story isn’t the ban. It’s that the system’s so rigid, it’s practically begging to be hacked.
The 63% P2P stat is the real kicker. People aren't using apps anymore - they're using WeChat like a dark market bulletin board. And the verification process? Five checks just to send USDT? That's not paranoia. That's the new normal. You don't trust the bank. You don't trust the exchange. You trust the person who sent you a voice note saying their name. Wild.
The convergence of capital flight, hyper-localized P2P liquidity pools, and stablecoin adoption as a hedge against systemic currency risk represents a decentralized financial primitives adoption curve that’s accelerating faster than regulatory frameworks can adapt. The e-CNY is a centralized ledger with zero privacy - a surveillance infrastructure masquerading as innovation. Meanwhile, the underground crypto ecosystem is essentially a self-sovereign monetary layer built on trustless escrow protocols, encrypted messaging channels, and behavioral compliance mechanisms driven by survival incentives. This isn’t a black market - it’s a parallel financial OS. And the fact that 82% of users who’ve been frozen continue trading? That’s not irrational behavior. That’s rational adaptation to institutional failure.