China’s role in shaping the global crypto market has been both foundational and paradoxical. In the early 2010s, the country emerged as the epicenter of Bitcoin mining, accounting for over 65% of the global hash rate by 2020. This dominance was fueled by access to cheap hydroelectric power in provinces like Sichuan and Yunnan, as well as the presence of hardware giants such as Bitmain and Canaan. Even after the 2021 mining ban, China’s legacy in mining persists—Bitmain remains a global leader in ASIC production, and underground mining operations reportedly continue in remote regions despite government crackdowns.
The 2025 Ban: A Total Severance
In June 2025, China implemented its most sweeping crypto policy to date: a complete ban on mining, trading, and even personal possession of cryptocurrencies. This move went far beyond previous restrictions, which had targeted exchanges and mining farms. Now, individuals holding Bitcoin, Ethereum, or any other decentralized token—even in foreign wallets—face legal consequences. The rationale? To eliminate competition with the digital yuan (e-CNY), China’s central bank digital currency. By outlawing decentralized assets, the government cleared the path for a fully state-controlled digital financial system.
Market Impact: Shock, Then Stabilization
Historically, Chinese regulatory moves have triggered sharp market reactions, and the 2025 ban was no exception. Bitcoin dropped from $111,000 to $104,000 within hours, while Ethereum fell nearly 7%. Yet, unlike earlier years, the market rebounded quickly. This resilience reflects a maturing global crypto ecosystem, with liquidity and investor confidence now distributed across regions like the U.S., Europe, and Southeast Asia. Decentralized exchanges (DEXs) and non-custodial wallets have also reduced reliance on centralized Chinese platforms, cushioning the blow of regulatory shocks2.
China’s Blockchain Strategy: Control Without Crypto
Despite its hostility toward decentralized cryptocurrencies, China remains deeply committed to blockchain technology. The government actively supports enterprise blockchain initiatives and has invested in projects like Conflux, a state-sanctioned public blockchain designed for regulatory compliance. Ethereum-based solutions are also being explored in logistics, finance, and supply chain management—albeit within tightly controlled environments. This dual approach allows China to harness the benefits of distributed ledgers while maintaining strict oversight, reinforcing its broader philosophy of centralized control over financial infrastructure1.
Hong Kong: A Parallel Gateway
While mainland China enforces a total ban, Hong Kong has emerged as a strategic outpost for crypto innovation. The city’s regulatory framework permits licensed exchanges and institutional participation, making it a de facto sandbox for Chinese capital and blockchain experimentation. Many Chinese-founded crypto firms, including exchanges and DeFi projects, operate out of Hong Kong to maintain access to global markets. This duality enables China to retain influence in the crypto space while publicly distancing itself from decentralized finance.
Strategic Holdings and Latent Influence
Even as it bans crypto domestically, China retains significant influence through its digital asset holdings. The government reportedly controls over 200,000 BTC seized from scams like PlusToken, giving it latent leverage over Bitcoin’s price movements. Additionally, Chinese firms continue to dominate the mining hardware supply chain, and underground mining still contributes to the global hash rate. These factors ensure that China’s presence in the crypto market, while less visible, remains structurally embedded.
A Global Market Still Watching Beijing
As of 2024, China accounted for 11.1% of global cryptocurrency market revenue. While this share is expected to decline due to the 2025 ban, the country’s historical contributions, technological infrastructure, and policy decisions continue to shape global narratives. Whether through its push for CBDCs, its blockchain investments, or its regulatory experiments, China remains a bellwether for how sovereign powers might engage—or disengage—with decentralized finance.
Shogun Lin
