Crypto Adoption in China Despite Ban: How 59 Million Still Trade in 2025

China banned cryptocurrency in 2021. Trading, mining, exchanges - all illegal. Banks were told to cut off crypto-related transactions. Apps were pulled from app stores. The government pushed its own digital currency, the e-CNY, as the only legal digital money. Yet, crypto in China didn’t disappear. It went underground. And by 2025, an estimated 59 million Chinese people are still using it.

How Can Crypto Still Exist in China?

The answer isn’t loopholes. It’s adaptation. Chinese users didn’t stop because the government said so. They found ways around it - using tools and tactics most governments never expected.

Most trade happens on offshore exchanges like Binance, Bybit, and OKX. These platforms don’t operate inside China, but millions of users access them anyway. How? Through virtual private networks (VPNs). A 2024 Chainalysis report found that 78% of Chinese crypto users rely on VPNs to bypass internet restrictions. It’s not just techies - it’s students, freelancers, small business owners, even factory workers with smartphones.

Peer-to-peer (P2P) trading is the real backbone. About 63% of all crypto transactions in China happen directly between individuals. No exchange. No middleman. Just two people, often connected through WeChat or QQ groups. They use escrow services - a third party holds the money until both sides confirm the trade. Around 45% of P2P volume runs through these systems. One common method: someone sends yuan to a seller’s bank account, then the seller sends Bitcoin or USDT to their digital wallet. Both sides verify with screenshots, phone calls, even voice notes.

Some users turn to privacy coins like Monero (XMR), which hide transaction details. Others use DeFi apps through modified browser extensions or custom Android apps like 'CryptoBridge' and 'Silk Road Wallet'. These apps don’t appear on official stores. They’re downloaded from third-party sites - and over 8.7 million times in the first half of 2025 alone.

Why Do People Keep Using Crypto When It’s Illegal?

It’s not about speculation alone. For many, crypto is practical.

Stablecoins like USDT are the most popular. Why? Because they let people send money overseas without going through banks. One user on a WeChat crypto forum said: "Sending USDT to my daughter in Australia saves me 87% in fees compared to Western Union. It takes 15 minutes, not three days." China has strict capital controls. You can’t easily move more than $50,000 abroad per year. Crypto bypasses that. For families with relatives overseas, students paying tuition, or freelancers getting paid in USD, crypto is the only reliable option.

Others use it to hedge against inflation. While China’s official inflation is low, real costs - housing, education, healthcare - keep rising. Young people see Bitcoin and Ethereum as stores of value, not just gambling chips. A 2025 Peking University study showed that 37.5% of crypto users are between 25 and 34. That’s higher than the global average. Older generations? Only 12.8% use it. This is a youth-driven movement.

The Government’s Double Game

Here’s the twist: while cracking down on crypto, China is quietly building its own digital currency system.

The e-CNY, or digital yuan, has over 260 million individual wallets and 15.5 million corporate wallets. It’s used for public transport, utility bills, and even salary payments to civil servants in pilot cities. The People’s Bank of China (PBoC) says it’s about efficiency, financial inclusion, and control.

But here’s the irony: the e-CNY is centralized. Every transaction is tracked. The government knows who paid whom, when, and how much. Crypto, by contrast, is anonymous - at least enough to slip past surveillance.

The government doesn’t want private digital money. It wants digital money it can control. That’s why it bans Bitcoin but promotes the e-CNY. One is a tool for citizens. The other is a tool for the state.

Who’s Getting Caught - And Who’s Getting Away?

The crackdown is real. In July 2025, China’s State Administration of Foreign Exchange shut down 27 P2P platforms accused of enabling capital flight. Banks froze 1,287 accounts. Fines hit 237 million CNY ($32.6 million).

But enforcement is uneven. Most targets are large operators - crypto ATMs, fake exchanges, organized groups running scams. Individual traders? Rarely pursued unless they’re moving millions.

A Reddit survey from r/CryptoChina showed 68% of users had experienced account freezes due to crypto activity. The average loss? 23,500 CNY ($3,250). But 82% said they kept trading. Nearly half increased their investment in 2025 compared to 2024.

Why? Because the risks feel manageable. Most users keep small amounts. They avoid big transfers. They use multiple wallets. They never link crypto activity to their real identity. And they know: if one account gets frozen, they just open another.

The Hong Kong Factor

Hong Kong is the legal gateway. While mainland China bans crypto, Hong Kong allows licensed exchanges. As of June 2025, seven exchanges are approved, including HashKey and OSL. Together, they processed $14.3 billion in monthly trading volume in April 2025.

Many mainland users use Hong Kong accounts. They send money through informal channels - cash deposits, third-party agents, or even underground money changers. Once the funds are in Hong Kong, they can trade legally. The border is porous. The rules are different. And for many, Hong Kong is the only safe place to trade crypto without fear of jail.

What’s Next? The Softening Signal

The government still says crypto is illegal. But behind closed doors, things are changing.

In July 2025, Shanghai’s State-Owned Assets Supervision and Administration Commission released meeting minutes suggesting a possible shift. One official noted: "The rapid evolution of digital assets necessitates more nuanced regulatory approaches." That’s not an official policy change. But it’s a crack in the wall. Analysts at Bernstein predict a 65% chance China will adopt a model like India’s - taxing crypto at 30% instead of banning it - by 2027.

Meanwhile, blockchain technology is still being tested in finance. In June 2025, 14 major Chinese banks launched a pilot program in the Shanghai Free Trade Zone using blockchain for cross-border trade settlements. The government doesn’t want crypto. But it wants the tech behind it.

Real People, Real Risks

On Zhihu, China’s version of Quora, a thread titled "How to safely trade crypto in China 2025" got over 14,000 upvotes. The top answer? A six-step verification process: check the buyer’s WeChat history, confirm their phone number, use a temporary SIM card, screen their bank statement, record the transaction, and wait 24 hours before releasing funds.

It’s not glamorous. It’s not easy. But it works.

The cost? Fraud is rampant. In Q1 2025 alone, Chinese users lost 1.2 billion CNY ($165 million) to crypto scams. Fake wallets, phishing links, fake P2P escrow services - they’re everywhere.

But for many, the risk is worth it. Crypto isn’t just money. It’s freedom. Freedom from state control. Freedom to move value. Freedom to invest outside a system that doesn’t trust them.

Final Thought: The Great Firewall of Crypto

China thought it could shut down crypto. It didn’t. Instead, it forced users to become smarter, more cautious, more creative. Chinese crypto users now have some of the most advanced evasion techniques in the world.

The ban didn’t kill crypto. It made it more resilient.

And as long as capital controls stay in place, as long as young people feel locked out of global financial systems, crypto will keep growing - quietly, secretly, stubbornly - in the shadows of the Great Firewall.