In the act of mainland Beijing trying to maintain the world’s strictest cryptocurrency China ban, Hong Kong is quietly becoming a regulated crypto hub, testing yuan-backed stablecoins and blockchain infrastructure that could establish the world’s second largest economy’s role in digital finance.
Beijing’s total prohibition on trading, mining, and even private cryptocurrency ownership contradicts Hong Kong’s licensed exchanges and state-backed blockchain projects, such as Chang’an Chain.
Hong Kong’s Chang’an Chain, a temporary protected status (TPS) networks, is designed for the sole purpose of supporting China’s digital yuan while keeping decentralized crypto at arm’s length.
China’s dual approach on cryptocurrency allows Beijing to suppress financial risks domestically while placing Hong Kong as a controlled gateway to global market of decentralized assets.
Yet, no official Crypto ban took place, but speculation grows. While “China bans crypto” oversimplifies reality, the country’s stance is more nuanced.
dkdrAlthough China stablecoin has continued to enforce severe restrictions, the potential launch of digital yuan stablecoin under Hong Kong’s new rules signals a financial shift. The divide reveals the complexity of China’s approach to cryptocurrencies, with some areas embracing the future of digital finance while others remain firmly resistant.
Chang’an Chain, included in Beijing’s 14th Five Year Plan, is emerging as a key player in the Chinese yuan stablecoin blockchain landscape. With a claimed transaction throughput of 100,000 TPS, it meets the demands of large scale financial and government applications.
As part of the 2025-2027 Blockchain Innovation Plan, Chang’an is positioned as a foundation for digital Renminbi (RMB) applications, collaborating with central state-owned enterprises to promote cryptocurrency Initial Coin Offering and stablecoin issuance.
Its technological strengths and institutional backing make it a strong contender in the Chinese stablecoin yuan and blockchain ecosystem.
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Is Cryptocurrency Allowed in China?
Unlike common belief, cryptocurrency trading in China isn’t strictly illegal.
Since the People’s Bank of China (PBOC) issued its first significant action in 2013, prohibiting financial institutions from facilitating Bitcoin transactions, the country’s approach has changed. China banned local cryptocurrency exchanges and Initial Coin Offerings (ICOs) in 2017 to cut out scams and reduce financial risk.
By 2021, the government ramped up its crackdown, criminalizing all cryptocurrency transactions and mining. As of August 2025, even private cryptocurrencies ownership is forbidden and banned – with severe penalties – as it falls outside official China cryptocurrency regulation.
However, these bans primarily target China’s stance on cryptocurrency and institutional involvement and public cryptocurrency trading in China rather than completely outlawing crypto use in personal, underground networks.
HashKey Group CEO Dr. Xiao Feng believes stablecoins are China’s door to the global crypto market due to international monetary competition, believing China’s blockchain innovation, complemented by Hong Kong’s regulatory progress, will eventually propel the country to becoming a crypto superpower.
Because Hong Kong offers regulatory clarity and China has significant Bitcoin reserves, the market may look forward to a shift in trend from being bearish to becoming bullish very soon. The focus is put on stablecoins, such as AxCNH versus offshore RMB, to spur cross border settlement.
China Crackdown on Cryptocurrency
Cryptocurrency China ban drive dates to the necessity to maintain financial stability and stem capital flight.
“Cryptocurrencies, especially speculative tokens like Bitcoin, are volatile and put the country’s financial system at enormous risks,” said financial analyst, Yuan He.
Governments worry decentralized currencies could undermine the yuan as an asset-holding currency and bypass governmental financial controls. Apart from this, to further tighten its control, the China crypto policy has also prohibited all crypto-related activities like mining in fear of causing economic instability and losing control of monetary policy for the central bank.
The involvement of China cryptocurrency exchange game is likely to take the market to levels we may not have seen yet. When that event takes place, some of the most promising stablecoins today will see the most gains.
While these measures have largely been successful in killing the local cryptocurrency China ban, Hong Kong’s efforts to create a more controlled crypto environment could pave the way for future regulatory changes across the region, potentially allowing China to confirm its influence over digital finance on its terms.
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