Chinese Government Crypto Seizures and Enforcement Actions: How China Banned Cryptocurrency Completely
Jan, 11 2026
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 Peopleās Bank of China didnāt just shut down exchanges-it made holding digital assets a criminal act. This wasnāt a surprise. It was the final step in a 16-year campaign to erase private cryptocurrency from Chinaās financial system.
How China Got to a Total Crypto Ban
China didnāt wake up one day and decide to ban crypto. It built this ban brick by brick, starting in 2009. Thatās 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, itās illegal to:- Own any cryptocurrency, even if itās 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 donāt need a warrant to seize crypto anymore. If youāre 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. Thatās the largest single crypto seizure in history. But hereās 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
Itās not about stopping fraud. Itās not about protecting investors. Itās about control. Chinaās real goal is the digital yuan. The state-backed digital currency isnāt just a payment tool-itās a surveillance tool. Every transaction is tracked. Every transfer is logged. Every citizenās 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 donāt need the stateās 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 canāt do that. And thatās why it had to go. Analysts call this the āfinancial firewall.ā China doesnāt 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 didnāt trade. He didnāt mine. He just didnāt report the transaction. The system flagged it. He was arrested. Even children arenāt safe. A 17-year-old in Shanghai was investigated after his parents found a crypto wallet on his phone. Heād 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, youāre breaking the law-even if you didnāt 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, thatās 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 didnāt collapse. It shifted. But Chinaās 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 Chinaās scale. The digital yuan, meanwhile, is now used by over 600 million people in China. Itās integrated into food delivery apps, public transit, and utility payments. The government says itās āconvenient.ā Critics say itās the most powerful financial surveillance system ever built.
Will China Ever Reverse This?
No. Thereās no sign of loosening. No whisper of legalization. Even in 2026, with global crypto markets booming and Bitcoin hitting new highs, Chinaās stance hasnāt changed. Why? Because the system works for them. They control the money. They track the flow. They eliminate risk. They donāt need decentralized finance. They donāt need peer-to-peer payments. They have their own version-and itās built to serve the state, not the people. The ban isnāt temporary. Itās permanent. And itās working exactly as planned.What This Means for the Rest of the World
Chinaās ban isnāt just about crypto. Itās a blueprint. Other countries watching closely: Russia, Iran, North Korea. Theyāre building their own digital currencies. Theyāre tightening controls. Theyāre 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 isnāt whether crypto can survive in China. Itās whether any country can afford to let its citizens hold money outside state control. China says no. And itās proving it every day.Is it still possible to own Bitcoin in China?
No. Since June 1, 2025, owning any cryptocurrency-including Bitcoin, Ethereum, or stablecoins-is illegal in China. All digital asset holdings are subject to seizure by authorities. Even holding crypto in a hardware wallet or on a phone is considered a violation of the law.
What happens if I use a VPN to access a foreign crypto exchange?
Using a VPN to access foreign crypto exchanges is explicitly banned under Chinaās 2025 regulations. Authorities monitor internet traffic and can detect VPN usage linked to crypto platforms. If caught, you face fines, asset seizure, and possible imprisonment. The government treats this as an attempt to evade financial controls.
Can I be punished for someone elseās crypto activity in my household?
Yes. Under Chinaās enforcement system, household members can be held responsible if crypto activity is detected on devices or accounts linked to their ID. Parents have been fined for their childrenās crypto wallets. Spouses have been penalized for joint bank accounts that received crypto transfers-even if they didnāt know about it.
Are there any legal ways to invest in digital assets in China?
No. All private digital assets, including decentralized cryptocurrencies and tokenized assets, are banned. The only legal digital currency is the digital yuan, issued and controlled by the Peopleās Bank of China. Any other form of digital money is considered illegal.
How does China track crypto ownership?
China uses a combination of financial monitoring, blockchain analysis, and internet traffic surveillance. Banks report suspicious transactions. Blockchain firms cooperate with authorities to trace wallet activity. Authorities also scan devices during raids or inspections for crypto wallet files, private keys, or exchange login histories. Even small, inactive wallets are flagged.
Has China seized any major amounts of crypto?
Yes. In 2025, Chinese authorities seized over 120,000 Bitcoin and 2 million Ethereum from domestic users and fraudsters. The largest single seizure occurred overseas, when UK police confiscated 61,000 Bitcoin from a Chinese national linked to a $7 billion scam. China is now negotiating with foreign governments to recover crypto assets held abroad by its citizens.
Is mining crypto still allowed in China?
No. All forms of cryptocurrency mining have been illegal since June 2021. The 2025 ban expanded this to include any device capable of mining, even small home rigs. Possession of mining hardware is now a criminal offense, and authorities conduct regular inspections of factories, warehouses, and homes.
What is the digital yuan, and how is it different from crypto?
The digital yuan is Chinaās state-controlled Central Bank Digital Currency (CBDC). Unlike Bitcoin or Ethereum, it is fully centralized, traceable, and programmable. The government can freeze accounts, limit spending, and track every transaction. Itās not decentralized. Itās not anonymous. Itās designed to replace cash and eliminate private digital currencies entirely.
Paul Johnson
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