China has been actively shaping its digital asset landscape through a dual-track strategy that balances promotion of blockchain innovation with restrictions on speculative cryptocurrency activity.
The country's rapid adoption of Bitcoin mining in the early days led to Chinese dominance of the global hash rate, peaking between 60% and 75% during the 2017-2020 period. In response to growing regulatory concerns, China banned initial coin offerings (ICOs) and shut down domestic crypto exchanges in 2017.
However, in a significant move, China has now prohibited private possession, trading, and mining of cryptocurrencies under its new regulatory framework. The digital yuan (e-CNY), on the other hand, is designated as the only legal digital currency.
The revised Anti-Money Laundering Law incorporates crypto-related transactions into the compliance framework, addressing long-standing gaps in monitoring illicit flows tied to digital assets. Additionally, regulators have warned banks and payment providers against offering services connected to crypto transactions.