China’s Crypto Ban Remains Firm
Being officially banned by the Chinese government in 2021, all crypto activities were deemed illegal. This ban means that the purchase and sale of cryptocurrencies, such as Bitcoin and Ethereum, is not allowed; operators of mining installations cannot mine; people cannot launch token sales through ICOs; and those who operate an exchange cannot operate one. The government had made it clear that such activities threaten financial stability, encourage capital flight, and facilitate illegal transactions.
From there, such a stance remains the same in 2025. The reversal of the ban has not been seen in China. Rather, it has very much been enhanced. The enforcement authorities continued prosecuting the offshore platforms serving Chinese users, with the domestic players being under strict supervision while trying to circumvent the restrictions. Publicised confiscations of crypto assets linked to criminal activities have ensured that the government’s position is taken seriously. Some recent reports suggest enforcement might now include individual ownership, though this is still subject to interpretation and debate.
Hong Kong’s Regulated Stablecoin Framework
While the mainland, in a sense, stays closed when it comes to crypto, a different story unfolds across the harbour in Hong Kong. The Stablecoin Ordinance shall have its start on August 1, 2025, to bring forth a regulatory framework regarding the issuance of stablecoins, i.e., digital tokens that must be backed one-to-one with fiat currency like the Hong Kong Dollar (HKD) or the Chinese Renminbi (RMB).
These frameworks came from a joint consultation paper by the Hong Kong Monetary Authority (HKMA) and the Financial Services and Treasury Bureau back in July 2024. Under the ordinance, only licensed institutions are permitted to issue or operate stablecoin-related services. These institutions must maintain full asset backing for every token in circulation. The HKMA is responsible for regulatory oversight.
Why Hong Kong, Not Mainland China?
Because Hong Kong’s legal and financial systems are separate from those of mainland China, it has the freedom to engage in trying out financial innovations that Beijing might be reluctant to directly introduce. This dual-track process is indeed in accord with the “one country, two systems” framework. It certainly does not connote any change in China’s core stance on the crypto industry. Conversely, it seems to entail a strategic interest in testing regulated blockchain finance in a liminal context.
Stablecoin Pilots and Legal Oversight
Two notable pilot programs are currently underway. Harvest Global Investments, a fund management firm, has engaged with the HKMA about trialling a stablecoin backed by RMB. RD Technologies, a fintech company founded by a former chief of the HKMA, has been admitted to the HKMA’s Stablecoin Issuer Sandbox and is exploring cross-border use cases. These trials operate within strict legal boundaries and are limited to verified users and institutions.
Unlike decentralised cryptocurrencies, which operate independently of any central authority, these stablecoins are fully regulated. They are not designed to be speculative assets. Instead, they aim to enable faster, more transparent, and traceable digital payments across borders, while preserving financial oversight.
Key Differences Between Crypto and Stablecoins
| Feature | Hong Kong Stablecoin | Bitcoin / Ethereum |
| Decentralised? | No | Yes |
| Government-controlled? | Yes (via licensing) | No |
| Backed by fiat? | Yes | No |
| Volatile? | No (pegged) | Yes |
China’s Digital Yuan Strategy
Parallel to this development, China has advanced its own central bank digital currency (CBDC)—the Digital Yuan, or e-CNY. This is a state-issued, fully centralised digital currency managed by the People’s Bank of China. It is designed to replace some forms of cash and is already being tested in various cities and sectors across the country.
| Element | Digital Yuan | HK Stablecoins |
| Issued by the government | Yes | No (licensed firms) |
| Usage area | Mainland | Cross-border via HK |
| Pegged to Fiat? | Yes | Yes |
| Backed by reserves? | Not publicly disclosed | Required by law |
No Indications of a Policy Reversal
Despite the developments in Hong Kong, there is no evidence to suggest that China is preparing to reintroduce or allow decentralised cryptocurrencies. The regulatory position remains firm. Authorities continue to monitor and penalise any crypto-related activities that breach current laws.
The Global Context of China’s Crypto Ban
Globally, this approach positions China as one of the strictest environments for digital currencies. Yet, through Hong Kong, it is still participating in the evolution of blockchain finance—albeit in a closely managed way. For countries and policymakers watching from the outside, Hong Kong’s stablecoin framework may offer a model for regulated digital currency infrastructure that balances innovation with oversight.
A Model for Digital Currency Regulation?
The use of state-sanctioned digital tokens, whether through stablecoins or CBDCs, raises broader questions. Will more governments look to replicate this model? How will stablecoins coexist with national digital currencies? Could this dual-track strategy influence future international financial standards?
What’s clear is that China continues to pursue control over digital currency flows. Whether through bans or tightly governed experiments, the goal remains the same: maintain financial security, regulate currency movements, and prepare for a digital future on its own terms.