China's Bans Crypto Trading
- thebrink2028
- Aug 4
- 5 min read
Shanghai, neon lights flickering, vendors hawking steaming baozi, and a young trader, Li Wei, hunched over his phone in a dimly lit café. He’s not checking WeChat or scrolling Douyin. He’s frantically trying to access his Binance account, his heart racing as rumors swirl, China’s cracking down on crypto, again. His life savings, tied up in Bitcoin and Ethereum, are at stake. This is a hammer on millions like Li Wei, caught in the crosshairs of Beijing’s latest crypto ban. But why? What’s driving China to slam the door on a $90 billion-a-month market while the world watches in disbelief?
What’s Happening?
China’s relationship with cryptocurrency is a stormy romance, passionate at first, then brutally severed. The latest blow came in August 2025, when Beijing doubled down on its 2021 ban, outlawing not just trading but mining, holding digital assets, and even crypto-related services. The official reasons? Financial risks, capital flight, and environmental concerns. But scratch the surface, and it’s clear there’s more at play, hidden fears, global power plays, and a vision for control that other nations aren’t fully grasping.
Li Wei’s Story
Li Wei, 29, isn’t a faceless statistic. He’s a coder by day, a crypto enthusiast by night, who poured his savings into Bitcoin, hoping to buy a flat in Shenzhen and Dubai. When the 2021 ban hit, he pivoted to Binance, using VPNs and overseas emails to skirt restrictions. But the 2025 crackdown caught him off-guard. His $50,000 portfolio, painstakingly built over years, now sits in limbo, inaccessible as Binance faces blocks in China. “It’s not just money,” he whispers, “it’s my future.” Li Wei’s story echoes across China, where millions of retail investors, from students to retirees, face similar heartbreak.
A $90 Billion Betrayal
Let’s talk numbers, brutal, jaw-dropping ones. Binance, the world’s largest crypto exchange, processed $90 billion in monthly transactions in China alone, despite the 2021 ban. That’s 20% of its global volume, funneled through VPNs, fake IDs, and forged bank documents. In 2021, Binance handled $9.5 trillion in trades worldwide, with China as its biggest market. Now, with the 2025 ban tightening enforcement, these transactions are grinding to a halt. The result? A potential $1 trillion annual loss for the crypto ecosystem in China, impacting not just traders but miners, who once accounted for 65% of Bitcoin’s global hashrate. That’s thousands of livelihoods, miners, coders, small businesses, wiped out overnight.
Compare this to the U.S., where crypto trading thrives under regulatory scrutiny but not outright bans. In 2023, the U.S. SEC sued Binance for money laundering and securities violations, yet the platform continues to operate. China’s approach is a sledgehammer where others use a scalpel. Why the difference? It’s not just about regulation, it’s about control.
China’s Real Fear: Losing the Reins
Beijing’s official line, financial risks, capital flight, environmental concerns, holds some truth. Crypto mining’s energy consumption is staggering; Bitcoin alone uses more electricity than some small countries. Capital flight is real too, wealthy Chinese citizens have long used crypto to move money abroad, bypassing strict capital controls. But dig deeper, and the real fear emerges: decentralized finance threatens the Communist Party’s grip on power.
Crypto, by design, is borderless, anonymous, and uncontrollable. It’s the antithesis of China’s tightly controlled economy, where every transaction is tracked, and the digital yuan, Beijing’s state-backed cryptocurrency, is poised to dominate. The digital yuan, unlike Bitcoin, allows the government to monitor every transaction, freeze accounts, and enforce policy with surgical precision. Crypto’s rise could undermine this vision, empowering individuals over the state. For a regime that values stability above all, that’s a nightmare.
Then there’s the global angle. China sees crypto as a Western invention, with Bitcoin dubbed a “U.S. financial fraud” by state media. Yet the ban isn’t just about American cryptos, it’s universal, targeting Chinese-developed tokens like NEO and VeChain too. Why? Because Beijing doesn’t want any crypto, foreign or domestic, challenging its digital yuan or fueling unregulated wealth.
Who’s Next?
China’s not alone in its crypto crackdown, but it’s the most aggressive. Let’s look globally:
India: Flirted with a crypto ban in 2021 but settled for heavy taxation (30% on gains, 1% on transactions). Crypto thrives, but under strict oversight.
U.S.: Regulatory battles abound, Binance faces SEC and DOJ probes, but crypto remains legal, with 40% of Americans owning digital assets in 2024.
El Salvador: The outlier, adopting Bitcoin as legal tender in 2021, though adoption remains rocky due to infrastructure issues.
Nigeria: Banned crypto trading in 2021, citing fraud, but reversed course in 2023 as youth-driven adoption soared.
China’s ban stands out for its totality. Other nations regulate or tax, balancing innovation with control. China’s choice to obliterate crypto suggests a deeper alertness, perhaps a fear that DeFi could spark financial dissent or destabilize its economy. Are they seeing something others aren’t? Possibly. China’s history of capital controls and internet censorship shows a state obsessed with predictability. Crypto’s volatility and anonymity are anathema to that.
What’s Not shared in the News
Mainstream media skims the surface, China bans crypto, markets dip, rinse, repeat. But TheBrink sees what they’re missing:
Sanctions Evasion: Binance’s Chinese users weren’t just retail traders. North Korea’s Lazarus Group and darknet markets used the platform to launder billions, with $2.35 billion in illicit funds traced to Binance in 2021 alone. China’s ban may partly aim to curb this shadow economy, shielding itself from international backlash.
Digital Yuan’s Edge: The ban clears the path for the digital yuan, already tested in 23 cities. By 2024, it processed $250 billion in transactions. Crypto’s decentralized nature threatens this state-controlled vision, and Beijing’s willing to sacrifice a $90 billion market to ensure dominance.
Social Control: Crypto’s anonymity could fuel dissent, letting citizens fund protests or bypass censorship.
The $90 billion in monthly trades isn’t pocket change, it’s the lifeblood of millions.
What Happens Next?
China’s ban will reshape the crypto landscape, but at what cost? Here’s what’s likely:
Market Disruption: Bitcoin’s hashrate could drop 20-30% as Chinese miners shut down, spiking transaction fees and slowing networks. Global prices may dip temporarily.
Digital Yuan Dominance: By 2027, the digital yuan could handle 50% of China’s digital payments, cementing state control but stifling innovation.
Global Ripple Effects: Other authoritarian regimes may follow China’s lead, with Russia and Turkey eyeing stricter crypto laws. Meanwhile, the U.S. and EU will likely tighten regulations without banning outright.
Human Toll: Millions of Chinese traders like Li Wei face financial ruin. Underground markets may thrive, but at higher risk, think fake IDs and black-market VPNs.
Will China lose or gain?
Short-term, it’s safer, capital stays put, the digital yuan reigns.
Long-term, it risks isolation. As DeFi grows globally, China’s tech-savvy youth may resent being cut off from a $2 trillion market. Innovation could stagnate, and talent may flee to crypto-friendly hubs like Singapore or Dubai.
What’s one hidden impact of China’s crypto ban you think the world’s missing? Drop your answer in the comments or tweet.
A Special Thank You
A heartfelt thank you to Li Wei, a coder, for sponsoring this article. Li lost his savings and now funds our work to expose hidden financial risks. “I want others to know the truth before they bet their dreams”. His courage inspires us, and we hope it inspires you to support TheBrink’s mission.
