PBOC Maintains Crypto Prohibition, While Illicit Mining Continues to Flourish

PBOC Reiterates Strict Ban on Cryptocurrencies Amid Global Adoption

The People's Bank of China (PBOC) has once again confirmed its uncompromising position on cryptocurrencies, emphasizing that digital assets remain prohibited under Chinese law due to their associated financial risks. At a coordination meeting held on November 28, the central bank stressed that both cryptocurrencies and related activities breach regulatory standards and are not recognized as legal currency in China.

Particular attention was given to stablecoins, which the PBOC criticized for failing to comply with customer identification and anti-money laundering (AML) protocols. The bank warned that these shortcomings make stablecoins susceptible to misuse in money laundering, fraudulent fundraising, and illegal cross-border capital movements. This stance highlights Beijing's ongoing commitment to financial stability, even as other countries increasingly incorporate digital assets into mainstream financial systems.

China's warnings are consistent with its sweeping 2021 ban on cryptocurrency trading and mining, a policy that remains in effect despite a resurgence in underground operations. Recent data suggests that China is now responsible for about 14% of global Bitcoin mining, a trend fueled by inexpensive electricity and surplus data center resources in provinces such as Xinjiang and Sichuan. Industry insiders report that miners are taking advantage of these favorable conditions to operate discreetly, with some former participants re-entering the market. Notably, Canaan, a leading manufacturer of mining equipment, has seen a significant increase in domestic sales, driven by rising Bitcoin prices and uncertainties surrounding U.S. tariffs that have dampened overseas demand.

Despite its ongoing ban, the PBOC has shown limited openness to digital asset innovation. Hong Kong's new stablecoin regulations, which took effect in August, and ongoing discussions about yuan-backed stablecoins indicate a cautious move toward regulated digital asset adoption. Nevertheless, mainland China’s regulatory stance remains unchanged, with authorities emphasizing the need for strict oversight to safeguard against systemic risks.

During its November meeting, the PBOC also expressed concern over the surge in cryptocurrency speculation, which has been amplified by global price increases, social media influence, and a rise in fraud cases involving stablecoins.

China’s approach stands in sharp contrast to that of other major economies, such as the United States, which have established regulatory frameworks to support the integration and institutional adoption of digital assets. In contrast, China continues to prioritize the development of its central bank digital currency (CBDC), the e-CNY, expanding its use through pilot programs and public sector transactions. This divergence raises questions about the future of the market, as China’s underground crypto sector persists despite regulatory crackdowns.

The PBOC’s focus on risk mitigation reflects broader national priorities, including maintaining control over capital flows and protecting the stability of the financial system. However, the continued activity of underground mining—estimated to account for 15-20% of global capacity—demonstrates the difficulties of enforcing bans in a decentralized industry. Some analysts believe that while official policy remains strict, local incentives in energy-rich areas could eventually prompt more flexible regulations.

As the global digital asset landscape continues to evolve, China’s dual strategy—strict prohibition on the mainland alongside cautious experimentation in Hong Kong—positions the country as both a regulatory outlier and a possible innovator in digital finance. The PBOC’s latest statements reaffirm its commitment to the 2021 ban, yet suggest that strategic adjustments may be possible as the market develops.