Crypto Adoption in China Despite Ban: How 59 Million Still Trade Underground
Jan, 15 2026
China officially banned cryptocurrency in 2021. No exchanges. No mining. No trading. The government said it was illegal. Banks were told to cut off crypto-related transactions. Apps were blocked. Yet, by 2025, 59 million Chinese citizens are still using crypto. That’s more than the entire population of Canada. And it’s the second-largest crypto user base in the world-after India.
How Is This Even Possible?
The Chinese government didn’t just say "no"-they went all in. They shut down mining farms in Sichuan and Inner Mongolia. They forced Binance, OKX, and other exchanges to leave the mainland. They pressured tech companies to block crypto wallets and DeFi apps. But they never banned private ownership. That tiny loophole became the backbone of a massive underground economy. People didn’t stop using crypto. They just got smarter. Most Chinese users now trade through offshore exchanges like Bybit and OKX, accessed via VPNs. A 2024 Chainalysis report found that 78% of Chinese crypto users rely on virtual private networks just to get online. It’s not a secret. It’s a necessity.The Rise of Peer-to-Peer Trading
Forget centralized exchanges. The real action is on WeChat and QQ groups. These are private chat networks where strangers meet to trade crypto face-to-face-digitally. Here’s how it works: A buyer and seller agree on a price for USDT (Tether). The buyer sends yuan to the seller’s bank account. The seller releases the crypto from an escrow service. The whole thing happens in under 10 minutes. No exchange. No paperwork. No traceable transaction logs. According to a June 2025 Lightspark analysis, 63% of all crypto trades in China happen through P2P channels. Of those, nearly half-45%-are handled through encrypted WeChat escrow bots. These aren’t random guys on the street. They’re organized, verified, and often have reputations built over years. One user on Zhihu, China’s version of Quora, shared a step-by-step guide to avoid scams: verify the seller’s ID, check their transaction history across six different platforms, use a temporary phone number, and only trade during daylight hours when banks are open to reverse fraudulent transfers. That post got over 14,000 upvotes.Why Stablecoins? The Real Reason People Use Crypto
Bitcoin? Ethereum? Those are speculative. Most Chinese crypto users don’t care about mooning prices. They care about one thing: getting money out of China. The government strictly controls how much cash you can send abroad. Sending $10,000 to your kid studying in Australia? It takes three days, costs 12% in fees, and requires a mountain of paperwork. Enter USDT. Buy it in China. Send it to a friend in Sydney. They cash it out locally. Done. Takes 15 minutes. Costs less than 2%. Chainalysis data shows 38.7% of all crypto transactions in China are now stablecoins, up from just 21.7% in 2024. A woman on a WeChat crypto forum wrote: "I used to send money to my daughter through Western Union. Now I use USDT. I save $400 every semester. And she gets it the same day. No one asks questions."
The Hidden Tech: Privacy Coins and Encrypted Wallets
Some users go further. They use Monero (XMR), a privacy coin that hides transaction details completely. Others use DeFi protocols through browser extensions that bypass government filters. Apps like "CryptoBridge" and "Silk Road Wallet"-not official, not on Google Play-have been downloaded over 8.7 million times in the first half of 2025. These apps use domain fronting and encrypted tunnels to slip past firewalls. They’re built by Chinese developers, for Chinese users, and they’re constantly updating to stay ahead of crackdowns. DappRadar reported 1.2 million monthly active users on Chinese-language DeFi platforms in Q2 2025. These aren’t speculators. They’re people using automated lending, staking, and yield farming to protect their savings from inflation and capital controls.The Government’s Double Game
While cracking down on Bitcoin and Ethereum, China is pushing its own digital currency: the e-CNY, or digital yuan. By the end of 2024, over 260 million individual wallets and 15.5 million corporate wallets were active. The government now uses it to pay civil servants in pilot cities. It’s integrated into public transport, utility bills, and even some B2B trade deals. The message is clear: "We don’t want private money. We want control." But here’s the contradiction: the e-CNY is centralized. Every transaction is logged. Every user is tracked. Crypto, by contrast, is anonymous. That’s why it thrives. Dr. Li Wei, an economist at Tsinghua University, said in a March 2025 Bloomberg interview: "The ban is unenforceable at the individual level. About 15-20% of Chinese adults have traded crypto at least once. They know the risks. They don’t care."Who’s Using Crypto in China?
It’s not everyone. It’s not even most people. But it’s a very specific group. - Age: 37.5% of users are between 25 and 34. That’s higher than the global average. Older people? Only 12.8% of users are over 45. Crypto is a young person’s game. - Gender: 89.2% of users are male. That’s even more skewed than the global average (86.9%). - Location: Most activity is in big cities-Shanghai, Shenzhen, Beijing, Hangzhou. Rural areas? Almost none. - Income: Users are typically tech workers, freelancers, or small business owners. People who deal with international clients or need to move money fast.