China Crypto Crackdown 2025: PBOC Expands Ban, Stablecoins Now Targeted as Hong Kong Tightens Rules

The “China crypto” policy environment reached a new milestone in 2025, as Chinese mainland authorities delivered their strictest crackdown yet—this time singling out stablecoins for an explicit ban. In November, the People’s Bank of China (PBOC) has reaffirmed, coordinated by the country’s top financial, judicial, and cybersecurity agencies, that all forms of cryptocurrency activity are illegal and that stablecoins, once perceived as a compliant gray area, are equally forbidden. In parallel, Hong Kong’s evolving regulatory landscape briefly opened the door to major tech players but has shifted again following recent halts on projects by Ant Group and JD.com, reinforcing an era of “compliance-first” digital finance.

This detailed article examines the latest “China crypto” ban policy, stablecoin developments, digital yuan adoption, and the persistent undercurrent of underground activity.

The 2025 PBOC Announcement: Ban Expands to Stablecoins

On November 28, 2025, Chinese financial and judicial authorities convened to reinforce and deepen the “China crypto” crackdown. The core message: all crypto-related business activities are illegal in mainland China, and, critically, stablecoins—including those pegged to major global or domestic fiat currencies—are now unambiguously banned.

The meeting, led by the People’s Bank of China and attended by key government ministries, declared that virtual currencies, by legal definition, do not possess the same status as sovereign money. They cannot circulate or function as payment instruments in China. All forms of “China crypto” activity—including mining, trading, investment, exchange operation, and related services—are categorized as illegal financial activities and will draw coordinated enforcement.

A special focus was placed on stablecoins. The PBOC highlighted that stablecoins are simply a type of virtual currency, not a legitimate alternative to state money. Officials underscored their failure to meet robust customer identification standards or anti-money-laundering requirements, and pointed to real risks of stablecoins facilitating money laundering, capital flight, fraudulent fundraising, and unauthorized cross-border transactions. The PBOC’s stance is resolute: “China crypto” of every variety, including stablecoins, cannot be tolerated under the mainland’s financial regime.

The Rise and Swift Halt of Stablecoin Activity in Hong Kong

While the “China crypto” sector was being squeezed to extinction in the mainland, Hong Kong, with its independent legal and financial system, became a rare bright spot for crypto innovation in early 2025—particularly for stablecoins. Major Chinese tech titans, including JD.com and Ant Group, moved to explore offshore yuan-pegged stablecoins and blockchain-based digital payment products with ambitions to modernize cross-border payments and e-commerce.

For a brief period, the Hong Kong stablecoin sector boomed with the anticipation of new regulatory clarity and issuance opportunities. However, the optimism was short-lived. In August 2025, Hong Kong’s government enacted the highly anticipated Stablecoin Ordinance, setting an exceptionally high compliance bar for market entry. The new law demanded “atomic-level” KYC and AML, mandating that issuers must verify, audit, and track the identity and transactions of every stablecoin user through the full value chain. Mainland users were strictly excluded, with VPN workarounds explicitly blocked.

As a direct consequence, both Ant Group and JD.com were ordered to suspend their stablecoin pilot programs. This regulatory intervention essentially halted all major tech-driven stablecoin activities within the city, as their business models hinged on servicing the vast base of mainland Chinese users, now legally unreachable. The rapid exit of these tech powerhouses marked the end of a short-lived era of innovation, shifting stablecoin issuance toward traditional banking incumbents. The Hong Kong Monetary Authority’s new rules firmly signaled that only banks and financial institutions with a proven compliance track record would be considered for stablecoin licensing.

The History of China Crypto Bans

China's journey with cryptocurrency is marked by waves of tightening “China crypto” regulation. The first significant move came in 2013, when regulators banned banks from cryptocurrency services. In 2017, the government formally prohibited initial coin offerings (ICOs) and closed local exchanges, disrupting a large segment of the global market. By 2019, any lingering domestic crypto businesses faced renewed scrutiny. The watershed year was 2021, as ten central agencies unified the message: all forms of crypto trading, including “China crypto” intermediaries and exchanges, were illegal. 2024 saw this enforcement ramp up even further, with a crackdown targeting not only crypto-financial service providers but also mining—the backbone of the “China crypto” ecosystem.

In 2025, the ban reached unprecedented strictness with the explicit targeting and criminalization of stablecoins. This latest regulatory action leaves no ambiguity, eliminating previously exploited loopholes, and consolidating a state monopoly over digital financial innovation through the digital yuan.

Digital Yuan (e-CNY): The State's Official Alternative

Amid an ever-tightening “China crypto” ban, the Chinese government has poured resources into expanding the use and reach of its own central bank digital currency, the e-CNY, or digital yuan. Early pilots began in 2020, but by 2025 the digital yuan has achieved true national scale. Cumulative transactions surpassed an astonishing 14.2 trillion RMB (over 2 trillion USD) by mid-2025, and the number of participating users and merchants continues to climb rapidly.

The digital yuan represents the Chinese state’s solution to digital payments: fully regulated, centrally managed, and programmable. The e-CNY is being used not just for consumer retail and e-commerce, but also for business-to-business settlements, payroll, social welfare, and select cross-border pilots—often in partnership with international banks participating in the Cross-Border Interbank Payment System (CIPS). Unlike “China crypto” assets, which are designed to bypass centralized controls, the digital yuan’s architecture enables a high degree of traceability, compliance, and responsiveness to state regulatory needs.

The Reality of Underground China Crypto Activity

Despite blanket prohibitions and aggressive law enforcement:

• Mining activity remains: According to recent industry studies, China still accounts for roughly 14% of global Bitcoin mining by hashrate (as of 2024), notably through dispersed, smaller-scale operations and “underground” setups that evade detection.

• Decentralized trading: Peer-to-peer, over-the-counter (OTC), and decentralized exchanges continue to serve Chinese users, often through VPNs and creative routing around Great Firewall controls.

• Stablecoins: Despite risk of prosecution, stablecoins remain popular for cross-border remittance, underground capital flows, and as off-shore store of value.

• Regulatory response: Enforcement agencies are ramping up blockchain forensics, focusing on suspicious on-chain flows and fiat on- and off-ramps. There’s a clear risk-reward calculation—while most workers and businesses steer clear, a subculture persists, illustrating the inherent difficulty of eradicating decentralized technologies entirely.

Conclusion

The latest 2025 “China crypto” ban policy marks the apex of a relentless regulatory campaign that has pushed all forms of decentralized digital assets, especially stablecoins, outside the law. However, it also signals China’s unyielding commitment to centralizing digital financial innovation under state control, embodied by the rapid expansion of the digital yuan.

Hong Kong’s regulatory reversal, halting leading tech firms’ stablecoin plans, echoes the mainland’s philosophy: if digital currency is to exist, it must be highly regulated, fully auditable, and managed solely by established financial institutions. Still, as history and current underground activity show, even the most comprehensive China crypto crackdown cannot fully eradicate decentralized asset use—leaving open questions about technology, regulation, and financial freedom that will resonate well beyond 2025.