Chinese Government Crypto Seizures and Enforcement Actions: How China Banned Cryptocurrency Completely

On June 1, 2025, owning or trading Bitcoin, Ethereum, or any other cryptocurrency became illegal in China. Not just regulated. Not just restricted. Banned. The People’s Bank of China didn’t just shut down exchanges-it made holding digital assets a criminal act. This wasn’t a surprise. It was the final step in a 16-year campaign to erase private cryptocurrency from China’s financial system.

How China Got to a Total Crypto Ban

China didn’t wake up one day and decide to ban crypto. It built this ban brick by brick, starting in 2009. That’s when authorities first warned against using virtual currencies to buy real goods. At the time, Bitcoin was worth less than a dollar. No one thought it mattered. But the government saw it as a threat to control.

By 2013, banks were ordered to stop handling Bitcoin transactions. In 2014, local exchanges were forced to close their accounts. In 2017, Initial Coin Offerings (ICOs) were outlawed, and every crypto trading platform in China was shut down. By 2018, miners were already packing up their rigs and moving to Kazakhstan, Russia, and the U.S. because the government was cracking down on electricity use.

The real turning point came in June 2021. The government banned all cryptocurrency mining, citing energy waste and financial instability. Overnight, China went from controlling 70% of global Bitcoin mining to nearly zero. Miners lost billions in equipment. Factories that made ASIC chips saw demand collapse. The ripple effects hit global hardware markets for months.

Then in September 2021, the PBOC declared all cryptocurrency transactions illegal-even peer-to-peer trades between individuals. But people still found ways around it. They used VPNs to access Binance, Kraken, or Coinbase. They stored crypto in wallets on their phones. The government watched. It waited.

The June 2025 ban removed every loophole. Now, it’s illegal to:

• Own any cryptocurrency, even if it’s stored in a hardware wallet
• Trade or send crypto, even to family members
• Mine or operate mining equipment, even at home
• Use a VPN to access foreign exchanges
• Accept crypto as payment for goods or services

How Seizures Work Now

Before 2025, seizures were messy. Authorities would raid homes, seize laptops, and hope the keys were written down. Now, the system is automated.

Every bank account and digital wallet linked to a Chinese ID is monitored. If funds move into or out of a known crypto address-even a single satoshi-the system flags it. Financial institutions are required to freeze accounts and report activity within 24 hours.

Police don’t need a warrant to seize crypto anymore. If you’re caught holding Bitcoin, Ethereum, or even a meme coin, the state takes it. No trial. No appeal. The wallet keys are extracted from your devices, and the assets are transferred to a government-controlled address. The value is then converted to yuan and deposited into the state treasury.

In October 2025, a Chinese national living in the UK was arrested for running a $7 billion crypto scam. UK police seized 61,000 Bitcoin from her home. That’s the largest single crypto seizure in history. But here’s the twist: China demanded the coins back. Not for punishment. Not for fines. Because, under Chinese law, those coins were never legally hers to begin with. The UK government is still negotiating whether to return them or use the funds for public services.

Why China Did This

It’s not about stopping fraud. It’s not about protecting investors. It’s about control.

China’s real goal is the digital yuan. The state-backed digital currency isn’t just a payment tool-it’s a surveillance tool. Every transaction is tracked. Every transfer is logged. Every citizen’s spending habits are recorded. Private crypto threatens that. If people can hold Bitcoin, they can hide money. If they can send crypto across borders, they can bypass capital controls. If they can earn interest on DeFi protocols, they don’t need the state’s banks.

The digital yuan gives the government total visibility. It can freeze accounts of dissidents. It can limit spending in certain regions. It can even program expiration dates on money-forcing people to spend it before it becomes worthless. Crypto can’t do that. And that’s why it had to go.

Analysts call this the “financial firewall.” China doesn’t just want to regulate crypto. It wants to make sure no alternative exists. No competition. No escape.

What Happens to People Who Break the Rules?

Penalties are severe. First offense: a fine up to 500,000 yuan (about $70,000 USD). Second offense: up to five years in prison. Third offense: confiscation of all assets, including property and vehicles.

In 2025, a man in Guangdong was sentenced to three years after his wife used a crypto app to send $12,000 to her brother in Canada. He didn’t trade. He didn’t mine. He just didn’t report the transaction. The system flagged it. He was arrested.

Even children aren’t safe. A 17-year-old in Shanghai was investigated after his parents found a crypto wallet on his phone. He’d bought $300 worth of Dogecoin with his allowance. His parents were fined. He was forced to attend state-mandated financial education classes.

The message is clear: if you touch crypto, you’re breaking the law-even if you didn’t know it was illegal.

How the Ban Changed the World

China used to be the center of the crypto world. In 2020, half of all Bitcoin mining happened in China. Three of the top five exchanges were based in Beijing or Shanghai. Millions of Chinese citizens held crypto as an investment.

Now, that’s gone. Mining rigs were sold off cheaply to the U.S., Canada, and Kazakhstan. Exchanges moved headquarters to Singapore, Dubai, and the Cayman Islands. Chinese investors who held crypto before 2025 either sold before the deadline-or lost everything.

The global market didn’t collapse. It shifted. But China’s exit created a vacuum. Prices dropped in 2021 and 2022 because Chinese demand vanished. Now, new markets have filled the gap-but none come close to China’s scale.

The digital yuan, meanwhile, is now used by over 600 million people in China. It’s integrated into food delivery apps, public transit, and utility payments. The government says it’s “convenient.” Critics say it’s the most powerful financial surveillance system ever built.

Will China Ever Reverse This?

No.

There’s no sign of loosening. No whisper of legalization. Even in 2026, with global crypto markets booming and Bitcoin hitting new highs, China’s stance hasn’t changed. Why? Because the system works for them.

They control the money. They track the flow. They eliminate risk. They don’t need decentralized finance. They don’t need peer-to-peer payments. They have their own version-and it’s built to serve the state, not the people.

The ban isn’t temporary. It’s permanent. And it’s working exactly as planned.

What This Means for the Rest of the World

China’s ban isn’t just about crypto. It’s a blueprint.

Other countries watching closely: Russia, Iran, North Korea. They’re building their own digital currencies. They’re tightening controls. They’re watching how China handles enforcement, seizures, and surveillance.

If China can ban crypto and get away with it-without economic collapse, without mass protests, without losing global influence-then others will follow.

The real question isn’t whether crypto can survive in China. It’s whether any country can afford to let its citizens hold money outside state control.

China says no. And it’s proving it every day.