China Doubles Down On Crypto Ban After Detecting New Trading Activity

What Happened

According to Reuters, Hong Kong-listed companies with crypto exposure saw sharp losses following the announcement of a renewed crackdown.

Investigators noted that 18 out of 49 underground banking cases in 2023 involved digital currency transactions, demonstrating how criminals adapt to exploit digital assets.

Market Context

China’s central bank has reasserted its strict prohibition on crypto trading following signs of renewed speculation in virtual assets.

Officials emphasized that virtual currencies lack legal tender status and cannot function as money in China’s markets, while related business activities constitute illegal financial conduct that undermines economic stability.

Yunfeng Financial Group, which has been expanding into tokenization businesses, dropped more than 10% in early Monday trading. Bright Smart Securities fell roughly 7%, while digital-asset platform OSL Group lost over 5%.

The selloff reflected market fears that Beijing’s hardline stance could derail Hong Kong’s ambitions to become a digital asset hub.

Despite China’s comprehensive ban on crypto trading and mining since 2021, enforcement remains difficult.

The central bank has also ordered social media platforms to shut down accounts promoting crypto trading.

At the same time, over-the-counter crypto trading volumes reached an estimated $75 billion in the first nine months of 2024.

The sector’s total market capitalization surpasses $300 billion, with Tether and USD Coin processing over $27 trillion in settlements over the past year.

Why It Matters

The meeting specifically flagged stablecoins as posing risks for money laundering, fraud, and illegal cross-border fund transfers.

The city passed stablecoin legislation in May and received expressions of interest from more than 40 firms seeking licenses under its new regulatory framework, including major financial institutions like Circle and Standard Chartered.

In May, the Cyberspace Administration of China closed more than a dozen accounts on Weibo, Douyin, and WeChat that were spreading false information and inducing citizens to participate in virtual currency transactions through offshore exchanges.

Details

The People’s Bank of China convened a high-level meeting on November 28, 2025, with 13 government agencies to coordinate enforcement and crack down on illegal digital currency activities that have recently resurfaced despite years of sweeping bans.

Hong Kong Stocks Tumble on Central Bank Warning

Liu Honglin, founder of Man Kun Law Firm, said the central bank statement “has erased any ambiguity, speculation and illusions” around China’s stablecoin policies, noting that “regulators have drawn a concrete red line on what used to be a vague borderline.“

Underground Mining and Enforcement Challenges Persist

Recent data from Luxor’s Global Hashrate Map shows China still accounts for 14.05% of Bitcoin’s total computing power, or roughly 145 exahashes per second, placing it third globally behind the United States and Russia.

Authorities have uncovered multiple underground operations in recent months.

In February, police dismantled a cross-border banking network that laundered over $136 million using crypto to bypass financial regulations.

Similarly, in August, Chinese regulators instructed brokerages and research institutions to halt the publication of studies or the hosting of seminars on stablecoins.

Local governments in Beijing, Suzhou, and Zhejiang have issued warnings about illicit fundraising linked to virtual currencies.

Stablecoins Draw Intensified Regulatory Scrutiny

Chinese officials have expressed particular concern about the global expansion of dollar-backed stablecoins, which they view as a strategic threat to the renminbi’s internationalization.