Updated on:12/09/2025 05:55 PM 
Despite implementing a comprehensive prohibition on cryptocurrency activities in 2021, China has witnessed the emergence of a resilient underground crypto marketplace that continues to flourish, according to recent investigations by The Wall Street Journal. Chinese investors have developed sophisticated methods to navigate the nation's strict regulatory landscape, utilizing virtual private networks, social media platforms, and face-to-face transactions to maintain their participation in the global digital asset economy.
China maintains some of the world's most restrictive policies toward cryptocurrency trading and investment. Government authorities have actively pursued individuals and entities involved in digital currency activities, resulting in legal consequences including detention, substantial financial penalties, and incarceration. Nevertheless, these enforcement measures have failed to completely eliminate crypto participation in the region. In a revealing interview, Ben Gagnon, Chief Mining Officer of Bitfarms, highlighted the subtle resurgence of cryptocurrency mining operations through innovative energy capture technologies integrated into residential buildings.
Analysis of data from blockchain analytics firm Chainalysis, presented in an October report, indicates that Chinese traders received approximately $86 billion worth of digital assets between July 2022 and June 2023. Notably, trading volumes on the Binance exchange alone reached nearly $90 billion monthly during this period, demonstrating the substantial scale of continued crypto activity despite regulatory restrictions.
Many Chinese cryptocurrency traders have preserved access to accounts on international digital asset exchanges established prior to the prohibition. By employing virtual private networks, these traders mask their geographical locations, effectively bypassing platform restrictions based on geographic location. Additionally, market participants leverage popular messaging applications such as WeChat and Telegram to facilitate peer-to-peer transactions, joining specialized groups where buyers and sellers connect directly, eliminating reliance on centralized trading platforms.
Physical exchange of digital assets has also become increasingly prevalent, particularly in inland urban centers like Chengdu and Yunnan Province. These regions reportedly exhibit more relaxed enforcement of crypto regulations, with traders arranging meetings in public venues such as coffee shops and laundromats to exchange wallet credentials or execute transactions using traditional currency or bank transfers.
While China has previously served as a significant hub for both cryptocurrency trading and mining operations, the government's position on digital assets remains uncompromising. The nation has expressed enthusiasm for blockchain technology implementation in various sectors including digital identity verification, agricultural supply chain tracking, and luxury goods authentication. However, unlike the decentralized ledger systems characteristic of Web3 technologies, China predominantly favors permissioned or private blockchain solutions for its digital infrastructure initiatives.
The persistence of cryptocurrency trading activities in China underscores the inherently decentralized and borderless nature of digital assets. This situation provides concrete evidence of the challenges governments face in attempting to regulate blockchain-based financial systems. Despite these obstacles, Chinese regulatory authorities continue implementing measures to restrict and minimize cryptocurrency usage within its borders.
