The illegal status of cryptocurrencies in China
Introduction: News Essence and Consequences
China continues to actively tighten its regulation of the cryptocurrency sphere. The People's Bank of China (PBoC) has confirmed that digital assets, including cryptocurrencies and stablecoins, have no legal status. They cannot be used as legal tender, which puts millions of users and traders at risk. The country has toughened laws to combat financial crimes such as money laundering and fraud, effectively influencing the dynamics of the global cryptocurrency market.
The consequences of this move extend far beyond China. Restrictions on crypto trading and mining significantly complicate the use of digital assets, which may force users to seek workarounds, often risking exposure to "dirty crypto" or sanction labels.
Breakdown: Laws and Facts
China's strategy to combat cryptocurrencies began long before 2025.
- 2021: China introduced a full ban on cryptocurrency trading and mining, citing threats to the traditional financial system.
- August 2025: Authorities restricted research and the distribution of materials regarding stablecoins. The Banking Regulatory Commission recommended reducing certain volumes of crypto operations in Hong Kong.
- October 2025: Despite strict measures, China's share of global Bitcoin mining rose to 14%.
The sharp focus on regulation is aimed at eliminating risks of money laundering and the use of cryptocurrencies for fraud. Stablecoins have been at the center of this discussion due to their popularity and ability to be easily integrated into traditional schemes.
Risks for Users
The bans have a direct impact on traders, miners, and crypto-asset holders:
- Traders: Risk of account freezes and sanction labels for participating in cryptocurrency transactions.
- Miners: Tightening conditions and the likely blocking of equipment.
- Hong Kong: Banking recommendations have tightened the rules for crypto operations, increasing the likelihood of service denials.
Furthermore, the lack of quality AML screening increases the probability of encountering "dirty crypto," raising the risk of account blocks for illegal operations.
How to Protect Yourself: Practical Recommendations
To minimize risks, users must take a responsible approach to cryptocurrency operations.
Key Tips
- Use decentralized wallets. They provide a higher level of privacy and security.
- Avoid suspicious transactions. Check addresses through specialized services to identify links to fraud or "dirty crypto."
- Monitor legislation. Regularly check for new restrictions and recommendations.
- Undergo KYC and AML screening. These methods will help avoid account blocks and sanction labels.
Preliminary address verification before every transfer is the key to safe operations. Modern blockchain analysis tools help eliminate interaction with suspicious addresses.
The Role of AML Checks in the Cryptocurrency Sector
AML verification has become a mandatory element in the cryptocurrency industry. Regular monitoring of wallets not only helps prevent illegal operations but also reduces risks for honest users.
- Tools for identifying illegal operations. Modern solutions provide the ability to track links between addresses.
- Ensuring security. Integrating AML and KYC checks helps avoid sanction labels and asset freezes.
In modern conditions, users should perceive these measures not as a complication, but as a tool for protecting their funds.
Conclusion
The illegal status of cryptocurrencies in China requires users to adapt to new realities. Compliance with legal requirements, the use of verified tools, and a competent approach to transactions will help minimize risks. Chinese restrictions highlight the importance of strengthening global regulatory standards to ensure the safety of market participants.
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